Location Greece Greece

Greek economy suffers surprise contraction at the end of 2016 as Eurogroup chief insists no ‘acute crisis’

The Greek economy suffered an unexpected contraction in the final three months of last year, highlighting the challenges facing the country as it faces further reform demands to unlock bail-out cash.

The economy shrank by 0.4pc in the final quarter of 2016, following growth of 0.9pc in the previous quarter, according to the country’s statistics office. Analysts had expected the economy to grow by 0.4pc.

Tensions between Athens and the International Monetary Fund (IMF) have reignited concerns about Greece’s third, €86bn bail-out, as a summer cash crunch looms.

The IMF and Brussels disagree about budget targets needed to get the Greek economy back on track as well as controversial pensions reforms and debt relief.

The Washington-based institution argues reforms are needed to make Greece’s debt sustainable in the long term.

Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, said on Tuesday that the Greek debt situation was not an “acute crisis”, with sizeable payments to the European Central Bank and private creditors not due until July.

Mr Dijsselbloem said Greece was unlikely to reach an accord with its international lenders before a meeting of eurozone finance ministers next Monday.

It came as Donald Trump’s nominee for EU ambassador claimed that some senior economists in Greece backed ditching the euro for the US dollar.

“I know some Greek economists who have even gone to leading think tanks in the US to discuss this topic and the question of dollarisation,” local media quoted him as saying.

“Such a topic of course freaks out the Germans because they really don’t want to hear such ideas.”

Ministers will meet next week to discuss Greece’s progress on reforms and the likely participation of the IMF in the rescue package.

Countries including Germany and Finland have said they will not participate in the third bail-out without the IMF.

http://www.telegraph.co.uk/business/2017/02/14/greek-economy-suffers-surprise-contraction-end-2016-eurogroup/

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