Accessibility links

Greek Economy To Shrink 2 Percent This Year


Greece's economy will shrink by 2 percent this year, while consumer prices will rise about 3 percent.

The predictions come from the Bank of Greece in a report issued Monday.

The report that the recession will continue in Greece is just the latest in a series of economic problems for the nation.

Athens has been cutting government spending in an effort to reduce a major government budget deficit.

However, Greek officials say they still need to borrow tens of billions of dollars, but can only get the money at high interest rates.

Athens has been asking other nations who use the euro to take actions to reassure investors who have been boosting interest rates out of concern about the risk of loans to Greece.

But German Chancellor Angela Merkel says investors should not expect Thursday's European Union summit to produce specifics of an agreement of an aid package for Greece.

Chancellor Merkel has said talk of a possible EU bailout could further destabilize markets by raising false expectations.

Her comments came just days after the European Commission urged Germany and other eurozone governments to back Greece with the promise of government-to-government loans. Commission President Jose Manuel Barroso said such an aid pledge is needed to stabilize the euro currency.

Germany -- Europe's largest economy -- has been reluctant to pledge direct financial aid to Greece, because it does not want to set a precedent for other eurozone countries with financial difficulties. The German public remains sharply opposed to direct financial aid to other eurozone countries.

XS
SM
MD
LG