LONDON — Greece’s economy performed much worse than forecast in the final quarter of 2016, according to the latest data from the country’s statistical service Elstat.
GDP shrank 1.2% in Q4 of 2016 — marking the worst quarterly performance for the stricken southern European economy since the heart of its debt crisis in the summer of 2015.
A previous first estimate of GDP in the quarter suggested that the economy shrunk just 0.4%, but the final figure is significantly worse.
The data comes just days after the country’s central bank governor Yannis Stournaras said that international lenders should lower the country’s fiscal targets from 2021 onwards to help boost its growth potential.
“The easing of the primary surplus targets, together with the implementation of the agreed structural reforms, would put the necessary conditions in place for a gradual lowering of tax rates, with positive multiplier effects on economic growth,” Stournaras said at an event over the weekend.
Greece is in the middle of a major tug of war between its creditors over how its current bailout packages are handled.
A second review of its bailout has dragged on for months, mainly due to differences between the EU and the International Monetary Fund over Greece’s fiscal targets in 2017, when its current bailout programme expires.
The IMF favours a softer approach to fiscal conditions, saying in a report in February that additional austerity measures and spending cuts would not improve Greece’s financial prospects in the longer term.