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Greece Industrial Production Falls Again

James Boston
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Greece Industrial Production Falls Again

There is no sign of the weakness abating in Greece’s Industrial sector as evidenced by this morning’s production data. The year on year Industrial Production figures for June have a yielded a fifth straight month of contraction in the sector. At -2.1% there was some improvement on June’s revised -5.4% but markets were hoping to see growth or around 3.6% on the month. The manufacturing subsector however is beginning to perform, the latest July figure showed that this expanded by 2.3% year on year recovering from June’s 3.6% contraction. It is the mining and electricity production components that are dragging down the overall Industrial numbers, these have contracted by 15.4% and 12.2% respectively.

Despite the struggling industrial aspect of the economy there are signs that the overall economic situation is improving in this crises hit country. The Government are predicting positive GDP growth in the third quarter of this year, this would represent the first recording of expansion since 2008. Prime Minister, Antonis Samaras, noted that “in the third quarter of 2014, the Greek economy will register growth for the first time in 24 quarters”. The overall growth for 2014 is now being forecast in the region of 0.6%, this follows a contraction of 1.1% and 0.3% in the first two quarters respectively.

Greece is still bearing a public debt level of 175% of GDP and is likely to seek further debt relief early next year, this may be granted in some form particularly as Greece’s government has pushed through the mandated austerity reforms against much public opposition. Greece’s successful return to the debt markets augers well as does the fact that budgets are now showing an above the line surplus before interest payments are factored in. A rowing back of some of the more unpopular austerity taxation measures is expected in this years budget and this should strengthen the Government’s hand to implement further structural reform.

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