Greek recession worse than expected, says Bank of Greece

THE Bank of Greece has warned that the country faces a worse-than-expected recession in 2012, with the economy set to shrink 5 per cent.

It is also urging politicians to make a swift return to cost-cutting measures after the May 6 general election or face «particularly harmful» economic consequences.

Tough conditions demanded for rescue loan deals have pushed Greece into a fifth year of recession and brewed widespread popular discontent.

Some economists fear that politicians may be tempted to relax their focus on reforms after the elections.

«Domestic and overseas conditions do not allow for the slightest complacency or relaxation … Full readiness is required the very day after the election campaign ends,» central bank governor George Provopoulos told the bank’s annual general assembly.

The European Union had recently predicted a 4.75 per cent reduction in Greek economic output this year. As the economy contracts, it becomes more difficult for the government to reduce its deficit.

Mr Provopoulos urged parties to stick to Greece’s punishing austerity measures after the elections.

heraldsun.com.au