Greek industrial production in April fell 2.2% from the comparable month of 2011, after an 8.1% annual drop in March, according to Elstat, the Greek statistics agency. In month-to-month terms, production in April fell 1.3%.
That suggests the economy is continuing to deteriorate in the second quarter, meaning little prospect of a near-term recovery for the bailed-out country. Greek gross domestic product shrank by 6.5% in the first quarter, Elstat said in a separate release Friday. That is a steeper fall than the 6.2% it reported in a previous estimate, and follows a 7.5% year-to-year drop in the fourth quarter.
“Recession pressures will remain [at] high levels during the second quarter of the year, because of the high uncertainty regarding the political scene ahead of the new elections and the future position of European leaders,” said Nikos Magginas, senior economist at the National Bank of Greece. A downturn in tourism—a key part of the Greek economy—and high unemployment will continue to damage demand in the economy, he said.
Former Greek Prime Minister Lucas Papademos said Thursday that the June 17 election must result in a government that is committed to remaining in the euro zone, warning that the fallout from a Greek exit would be disastrous.
In an impassioned defense of the much-criticized economic adjustment program for Greece, Mr. Papademos insisted that it was the only way forward for the country, and urged both ambitious fiscal consolidation and deeper structural reforms to ensure that conditions are met for Greece to remain a member of the euro zone.
Opinion polls don’t point to a clear election winner. Political uncertainty has taken its toll on public confidence in the economy, with a reading of economic sentiment slipping last month after the inconclusive poll on May 6. The Foundation for Economic and Industrial Research said its monthly economic climate index fell to 76 points in May from 77.3 in April.
Confidence among Greeks has been damaged by years of recession and rising unemployment, partly fueled by government spending cuts and tax rises insisted upon by the country’s international creditors. Joblessness rose to a record-high rate of 21.9% in March, official data showed Thursday.
In another reflection of the weak state of the economy, Elstat said Friday that consumer price inflation slowed sharply in May to an annual rate of 1.4%, compared with 1.9% in April.