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Home > Blogs > Shaun Richards > Whatever happened to the claims of "Grecovery" for Greece?

Whatever happened to the claims of "Grecovery" for Greece?

Whatever happened to the claims of Shaun Richards
The most regular feature of the economic and financial crisis which has so ravaged the economic landscape in Greece has been claims that a recovery is just around the corner. For example, even after allowing a few months for the "shock and awe" plan of May to bed in, the International Monetary Fund (IMF) told us this in September 2010:
"The authorities saw the risks to the growth outlook as being on the upside."

Even a cursory glance at what followed shows this to have been a rose-tinted fantasy. The prediction was for the Greek economy to shrink by 2.6% in 2011 before growing by 1.1% in 2012 and by 2.1% in 2013, and then to grow at that rate at least for the rest of the decade. According to the Eurostat, the Greek economy in fact shrunk by 7.1% in 2011 and by 6.4% in 2012; so rather than having some "upside", the growth forecasts were overstated by 12%. Also as of the latest data for the first half of 2013 the Greek economy is still shrinking at an annual rate of 3.8%. If this had not had such a dreadful effect on Greece and its people, such incompetence would be amusing - but all smiles are grim because of the pain this has inflicted.

An Odd Development

There have been regular claims from apologists for the above that Greece is in the process of turning a corner, and these built up to a siren chorus in the summer of 2013. The fact that the road that Greece is on looks like it is of Roman design, who famously avoided corners, seems not to have bothered them one jot! Indeed, as I discuss below, there are some areas where it is not at all possible to argue that things are getting worse more slowly.

Retail Sales,

If you look at the pattern for these and the existing heavy declines, it is only natural to think that the declines must eventually slow and then stop. However, only on Monday, such thoughts got something of a rude awakening from the Greek statistics agency Elstat:
"The retail trade volume index, including automotive fuel, decreased by 14.0% in July 2013 compared with July 2012. The Index in July 2012 recorded a decrease of 9.2% compared with July 2011."

Those were not only of an economic depression type scale, but they were showing signs of an acceleration. This left retail sales volumes at 67.9% of those of 2005, and confirmed that statistics on the Greek economy have not lost their ability to shock.


No doubt a driving force in the numbers recorded above was provided by what we had learnt only last Friday:
"The Index of wages in the 2nd quarter 2013, compared with the corresponding index in the 2nd quarter of 2012, recorded the same decrease of 7.5% with the one that was recorded when comparing the corresponding Index of 2012 with that of 2011."

This particular causal relationship seems all too clear as falling wages impact on retail sales. Indeed since Greece has, until recently, had positive inflation, real wages have been even weaker.

Looking forwards

Much of the euro area has shown signs of its recovery from its recent recession, but the latest business survey for manufacturing in Greece has not joined this theme:
"Reflective of a renewed decline in new orders placed with manufacturers, the level of goods production contracted at a faster pace in September."

The actual reading for the Markit Purchasing Manager's Index for September was 47.5, so manufacturing in Greece is still shrinking.


The situation here is already grim with the unemployment rate being recorded as 27.9% in June with youth (15-24) unemployment reaching 58.8%. But the GSEE Labour Institute has today made a forecast which is certainly not rose-tinted. From Kathimerini:
"Greece's unemployment rate will rise to 34 percent by 2016, according to a study by GSEE's Labor Institute."


As you can see from the latest numbers, there is at least some doubt over whether the decline in the Greek economy has halted - let alone whether we are seeing a recovery. This is in spite of the fact that there have been substantial falls already. But then those running the bailout of the Greek economy have been much better at the propaganda war than the economic one all along. Although, they may find it difficult to explain why a third bailout is needed when the first one was supposed to be a "shock and awe", or why the default was insufficient too.

Tags: economic growth , economic recovery , financial crisis , Greece , Greece news , Greek economy , IMF
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