Tuesday, April 24, 2012

Greece's economy will contract more than 5% in 2012, central bank chief warns

Greece's economy will contract a deeper than expected 5 percent this year, the country's central bank chief said today.The projection topped a previous forecast the central bank made in March, when it projected the 215 billion euro economy would contract 4.5 percent after a 6.9 percent slump in 2011.

Twice bailed-out Greece is in its fifth consecutive year of recession.

Speaking to shareholders at the central bank's annual assembly, George Provopoulos, also a European Central Bank Governing Council member, urged strict adherence to reform and fiscal adjustment commitments Greece has agreed with its euro zone partners, saying they were needed to return the economy to sustainable growth.

Provopoulos warned that Greece's euro zone membership was at stake if it failed to follow through on its pledges, especially after national elections next month.

"If following the election doubts emerge about the new government and society's will to implement the program, the current favorable prospects will reverse," he said.