By George Georgiopoulos
ATHENS, July 9 Greece's economy could shrink by
as much as 5 percent this year, the Athens-based IOBE think tank
said on Tuesday, revising down its previous projection and
offering a more pessimistic forecast than the country's foreign
Athens, which has been limping along on bailout funds since
2010, secured its latest lifeline from its European Union and
International Monetary Fund lenders on Monday but was told it
must keep its promises on cutting public sector jobs and on
selling state assets to get all the cash.
But the austerity prescribed by these lenders to shore up
Greek finances is expected to keep the economy in depression
for a sixth consecutive year and push already soaring, record
unemployment to yet new highs.
"The projection on growth must be adjusted downwards - the
recession this year will be around 5.0 percent," IOBE said in
its quarterly report. It said it would range between a decline
of 4.8 and 5 percent, compared with its previous forecast of a
4.6 percent slump.
The EU and IMF expect the economy to shrink by 4.2 percent
in 2013; the Bank of Greece projects a contraction of 4.6
percent. The economy shrank 6.4 percent last year.
"Fiscal consolidation and improved competitiveness have not
been coupled with successful implementation of the structural
reforms programme," the locally influential think tank said.
IOBE projected the country's unemployment rate will rise to
27.8 percent this year, raising its previous 27.3 percent
projection. Unemployment was 26.8 percent at the last count.
"As long as the recession persists, the economy isn't only
burning fat but also productive tissue," said Nikos Vettas, the
new head of IOBE.
"TURMOIL AND UNREST"
Prime Minister Antonis Samaras's coalition government is
facing stiff resistance to the reforms meant to kickstart the
economy, and protests against public sector layoffs have
gathered steam in recent days.
Hundreds of municipal workers, including uniformed municipal
police furious at EU/IMF-mandated layoffs in the public sector,
took to the streets Athens for the second day in a row, sounding
sirens and waving "Say no to layoffs!" banners.
Greece was granted three-month extension by the troika to
put 12,500 public sector workers in a so-called mobility pool -
meaning they have eight months to find work in a different
department or end up fired - after missing a June deadline.
Some 4,200 public sector workers, among them teachers,
school guards and employees at the administrative reform
ministry, will be placed on the scheme by the end of July.
Newly-appointed Administrative Reform Minister Kyriakos
Mitsotakis, tasked with shrinking and modernising the antiquated
civil service, said he had offered to start with cuts in his own
ministry, by laying off 50 of 400 staff, mostly drivers.