RTTNews - Greece has started to feel the effects of the global downturn, after registering strong growth for a decade, the International Monetary Fund said in a report Thursday. Meanwhile, the lender expects fiscal consolidation measures in the country to continue further.
The IMF expects Greece's real GDP to contract 1.7% in 2009 and by 0.4% in 2010, after a 2.9% growth in 2008. However, the agency expects GDP to rise from 2011 onwards.
The lender said the growth slowed substantially in the early part of the year, driven by lower investments and exports, and a fall in private consumption as confidence and employment weakened.
The IMF said the general government balance remains under pressure, reflecting falling revenues and additional expenditure, which the government was trying to offset partly by consolidation measures and tax administration efforts. However, the debt ratio continues to rise from its already high levels.
The lender emphasized that the fiscal consolidation could not be postponed any longer. The IMF welcomed the deficit-reducing measures in 2009, but called for further efforts to place the public debt on a sustainable downward path.
In 2008, public finance of the general government as a percentage of GDP showed a deficit of 5%, rising from 3.6% in the preceding year. The IMF expects this ratio to increase further to 5.9% in 2009. Gross debt was 97.6% of GDP in 2008, and the agency expects it to rise to 108.5% this year.
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