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Olli Rehn: recession in Greece will be greater than expected

06 May 2010 / 14:05:02  GRReporter
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In 2010, recession in Greece will reach 4 percent of GDP and in 2011 it will fall to 2.6 percent of GDP. This said EU commissioner of Economic Affairs Olli Rehn in Brussels, who presented the updated forecast of the European Commission on the state of the Greek economy. This is a bigger recession than expected in the Brussels forecast from April 21. Olli Rehn said that this is due to additional reforms that are equal to 2.5 percent of GDP in the first two years of financial adjustment. According to Commissioner indicators of Greek economy will begin to affect favourably the labour market. According to forecasts the economic growth of Greece will increase in the last quarter of 2012, which will affect 2013 and 2014. 

Overall regarding the eurozone Olli Rehn noted that the development in 2010 will reach 0.9 percent of GDP and in 2011 it will increase to 1.5 percent of GDP. “This year the improvement in the pace of development is very good for EU,” noted Commissioner Olli Rehn. Regarding Greece, he stressed that "the EU and IMF program, with which the Greek government agreed, is multi-annual program, which gives Greece a long time to stabilize its public finances and regain lost competitiveness." 

As regards to the mechanism of financial support, all EU countries said they will approve the financial aid for Greece, despite the worrying signs that the country sends. According to the Commission Greece will be able to return to the markets after a year and a half, and €110 billion will be sufficient to meet the financial needs of Greece. 

"The thoughts of all Europeans are targeted towards the victims in Athens after the wave of violence that followed after the demonstration of thousands of citizens against government economic reforms", said the President of the European Council, Herman van Rompuy. "We are worried about the economic and financial situation in Greece. But right now we are thinking of the lost human lives in Athens," said Rompuy. "One major plan is on the verge to be closed. This agreement is credible and ambitious." 

French Deputy Minister on European topics Pierre Lellouche and his German counterpart Werner Hoyen will soon come to Greece, to express the support of both countries to Greece, especially after the violent demonstrations. 

The speech of Germany’s Chancellor Angela Merkel before Parliament passed violently, because she defended her government's decision to provide assistance to Greece amounting to €22.4 billion. Merkel was booed and repeatedly interrupted by her political opponents and did not hesitate to hand over responsibility for the decision on the previous Socialist government of Gerhard Schroeder, during whose time Greece was admitted to the eurozone. The Parliament in Berlin will vote tomorrow on the financial package of €22.4 billion for Greece.

Tags: Greece Athens riots Olli Rehn Angela Merkel IMF EU EC
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