Greece's struggling economy will contract by another 4.5 percent of output this year ahead of a possible rebound in 2013, the Bank of Greece said in an annual report on Monday. "The recession is expected to continue in 2012 and according to temporary estimates, the average annual contraction in gross domestic product will be in the order of 4.5 percent," the Bank said in its annual report on monetary policy.
It added that the economy, now in a fifth year of recession, shrank by 6.9 percent in 2011. The average unemployment rate rose to 17.7 percent and is expected to exceed 19 percent this year. Greek bank deposits fell by around 35 billion euros during the year, and the rate of bad loans rose to 14.7 percent by the end of September from 10.5 percent at the close of 2010. And despite a wave of austerity measures imposed in return for EU-IMF loans, the budget deficit had come in at 10.6 percent in 2011, the Bank said.
"During 2013 it is estimated that the economic recovery can begin," it said, forecasting a possibility of fewer job dismissals and lower inflation. The European Commission last month said the Greek economy would shrink by 4.4 percent in 2012 compared to a previous forecast of 2.8 percent, while the International Monetary Fund estimated the contraction at 4.8 percent. The IMF last week decided on a new 28 billion euro ($36.5-billion) loan for Greece.