* Q2 GDP shrinks 0.2 pct year on year
* Slowest pace of contraction since Q3 2008
* Economists expected contraction of 0.4 pct
(Adds economist comment, budget data)
ATHENS, Aug 13 Greece's economy shrank in the
second quarter at its slowest annual pace since late 2008 when
its protracted recession began, data showed on Wednesday,
supporting expectations that Athens will emerge from the
six-year slump this year.
Fresh data released by the finance ministry also showed
Athens was well ahead of target for a primary budget surplus -
which excludes debt servicing costs - this year.
Gross domestic product, based on seasonally unadjusted data,
shrank 0.2 percent year-on-year, with the pace of contraction
slowing for the fifth straight quarter.
That topped expectations among economists polled by Reuters,
who predicted the 183 billion euro ($244.38 billion) economy
would contract by 0.4 percent in the second quarter.
Greece and its international lenders project the economy to
pull out of recession this year and expand by 0.6 percent,
helped by investments, exports and tourism.
Athens has enjoyed a boost in fortunes in recent months,
buoyed by two successful bond sales after a four year exile from
markets and improved market sentiment since nearly crashing out
of the euro in 2012.
"Although we do not yet have the GDP breakdown, it appears
that the improvement in private consumption witnessed in first
quarter data continued," said economist Platon Monokroussos at
The pace of contraction weakened sharply last year with the
decline in output slowing from 6 percent in the first quarter to
2.3 percent in the last quarter, resulting in an annual
contraction of 3.9 percent for 2013 as a whole.
ELSTAT does not provide seasonally adjusted
quarter-on-quarter data, which most countries use to measure
their economic performance.
Hit by austerity policies imposed by European
Union/International Monetary Fund lenders who bailed out Greece,
the economy has shrunk by almost a quarter over six years,
suffering its most protracted recession since World War II.
A key driver of the decline has been a 26 percent slump in
household consumption as record unemployment and wage cuts
slashed disposable incomes, coupled by a sharp fall in
"We expect a switch into positive year-on-year growth in the
third quarter with full-year 2014 growth likely to exceed 0.5
percent," Monokroussos said.
On the fiscal front, the finance ministry said the central
government budget had a 2.3 billion euro primary surplus in the
first seven months of the year, topping a target of 800 million
The central government surplus excludes the budgets of
social security organisations and local administrations and is
different from the figure monitored by EU/IMF lenders, but gives
an indication of the country's progress in bringing its finances
back on track.
(U.S. dollar = 0.7488 euro)
(Editing by Deepa Babington/Jeremy Gaunt)