Greece poised for recession as uncertainty takes its toll

Barely a year after emerging from a savage recession comparable in its intensity to the Great Depression in the U.S., Greece's economy is shrinking again.

The uncertainty generated by January's general election and the drama over extending Greeces financial lifeline is helping to push the economy back toward recession despite encouraging signs from the tourism sector, the country's biggest money earner.

The uncertainty, which started toward the end of 2014 when early elections were called, has damaged confidence among investors, consumers and business owners.

Though few official economic figures for the first months of 2015 are available, surveys suggest the manufacturing sector is contracting as both foreign and domestic clients are more hesitant to make new orders. And the financial system has been shaken by an apparent increase in deposit withdrawals by worried savers, which is seen to have hurt investment.

The reverse

When figures last fall showed the Greek economy finally growing again after a recession that saw it shrink by a quarter and unemployment and poverty levels swell dramatically, then Prime Minister Antonis Samaras said "Greece is back."

The return has been brief - three quarters in fact.

In the last three months of 2014, the Greek economy shrank by a quarterly rate of 0.4 percent, double the initial estimate. If the first quarter of 2015 is negative, Greece will officially be back in recession - not something most economic forecasters were predicting just a few months back.

"Following the first contraction in activity in a year during the fourth quarter of 2014, the economy is anticipated to enter recession," said IHS senior economist Diego Iscaro.
...