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Greek tragedy over as country pulls out of worst recession in half-century


Greek Prime Minister Antonis Samaras. Reuters

Greek Prime Minister Antonis Samaras. Reuters

Greek Prime Minister Antonis Samaras. Reuters

GREECE has ended its worst recession in more than a half-century, emerging from a period marked by two bailouts and financial-market turmoil that almost pushed the country out of the euro.

The economy as measured by gross domestic product (GDP) increased 0.7pc in the third quarter, according to data from Eurostat, the European Union's statistics office.

From a year earlier, the economy grew 1.7pc, according to a separate release from Greek authorities.

The six-year recession was deepened by budget cuts tied to its rescue, which has left Prime Minister Antonis Samaras struggling in political polls.

The government's reform efforts got the public finances sufficiently under control to allow Greece to sell bonds this year for the first time in four years, and Samaras now wants to push on and exit the aid programme.

"For the rebound to be sustainable you need investment, which will help the Greek economy recover the lost ground," said George Papaconstantinou, Greece's finance minister when it received its first bailout in 2010.

"If we abandon the effort which started in 2010, we run a real danger of reliving the same nightmare and all the sacrifices will have been in vain."

Yesterday's data show that GDP rose 0.8pc in the first three months of the year and 0.3pc in the second on a quarterly basis.

Confirmation that Greece has pulled out of a recession may help Samaras follow Ireland, Portugal and Spain out of the nation's bailout programme. To do so, he must reverse an increase in Greek sovereign borrowing costs in the past two months driven by renewed political instability and disagreements with euro area and International Monetary Fund officials about the pace of reforms.

The country's 10-year bond yield fell 11 basis points to 8.04pc by mid-afternoon yesterday. While that's down from a record of 42pc on the eve of the biggest debt restructuring in history in 2012, it's up from about 5.7pc in early September, threatening the country's continued access to markets.

Greece was the first of five Eurozone countries to receive a bailout in 2010 after its budget deficit spiralled to 15.7pc the previous year, more than five times the European Union limit.

As the crisis pushed the currency bloc to the brink of a breakup, Athens was rocked by anti-austerity protests and violent riots as successive governments pushed budget cuts through parliament in knife-edge votes.

Havard University professor Martin Feldstein, Nobel laureate Paul Krugman and other economists suggested during the crisis that Greece might need to leave the euro to spur efficiency via a cheaper currency.

Having said during the Eurozone crisis that it was more likely than not that a country would exit the currency bloc within five years and Greece was the prime candidate, Roger Bootle, the chairman of London-based Capital Economics said the country still has little to celebrate.

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"It's been devastating," said Bootle. "So if it gets a flick up, does that mean you should open the Greek brandy? I'd say no."

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