World Bulletin / News Desk
Greece's economy shrank 6.2 percent on an annual basis in the second quarter, a slump thatis expected to persist as the government scrambles to nail downbillions in additional cuts to keep international bailout fundsflowing.
Currently in its fifth consecutive year of economicdepression, Greece is suffering record unemployment with nearlyone in four Greeks without a job, undermining efforts to meetrevenue targets and reduce the budge Athens is keen to convince euro zone partners and the International Monetary Fund of its will to bring an economic adjustment plan back on track before asking for modifications and more time to spread out the pain of more cutbacks. But the fiscal drag caused by the pursued austerity policiescoupled with liquidity constraints and lingering uncertainty islikely to keep recessionary headwinds in full force.
"We project GDP to contract by 7.1 percent in 2012 and by2.4 percent in 2013, on the back of further significant declinesin disposable incomes, rising unemployment and plummetinginvestment activity," Eurobank economist Theodore Stamatiou said.
Greece's jobless rate has already climbed to 23.1 percent,with nearly 55 percent of those aged 15-24 out of work, adesperate situation that fed into the popularity of anti-bailoutparties in elections earlier this year.
The three-party coalition government that emerged after tworounds of polls is working to nail down 11.5 billion euros ofsavings and plans to revive a labour measure targeting 40,000public servants for eventual dismissal. Without the additional savings the government's budget willstill show a primary deficit of 1 percent of GDP in 2014, wellshort of a targeted 4.5 percent surplus to help stabilise debt.
The second quarter preliminary gross domestic product(GDP)estimate, released by statistics service ELSTAT on Monday,was based on seasonally unadjusted data and follows a 6.5percent GDP decline in the previous quarter. Think tank IOBE expects the economy to shrink 6.9 percentthis year, a bleaker outlook than estimates by the Bank of Greece and the OECD earlier this year, which project acontraction of 5.0 to 5.3 percent, respectively.
ELSTAT did not provide detailed estimates on the GDP components - consumption, capital investment, exports andimports - in the second quarter. "It's not a major surprise, we knew the Greek economy wascontinuing to struggle but hopefully it's some sign that therate of decline is starting to bottom out," said Chris Williamson, chief economist at London research firm Markit. Greece is behind targets and structural reform benchmarksagreed with international lenders who are demanding fullimplementation before official funding resumes.
Inspectors from the European Union, International MonetaryFund and European Central Bank troika have back an assessment ofGreece's performance and will report back in September onwhether it deserves to get more payments under the 130 billioneuro rescue package. Weak spots where Greece has failed to deliver as plannedinclude public sector job cuts, reductions in state-run pensionbenefits, the settlement of nearly 7 billion in state arrearsand proceeds from privatisations.
The government changed the leadership team at theprivatisation agency aiming speed up the asset sales programmewhich fell far below a target of more than 3.6 billion euros. Public administration reform, renewed emphasis on curtailingtax evasion are also part of the reforms agenda.
Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Higher cereal, sugar and dairy prices pushed food price index by 10.2 percent annually in July
HSBC was also a big riser, gaining three percent at £7.65 ($10, 8.5 euros) in late morning trade after the British banking giant announced a share buyback plan alongside a rise in first-half profits.
Both main crude contracts made strong gains, with WTI testing $50 a barrel for the first time since late May and Brent heading towards $53, while mining giants BHP Billiton and Rio Tinto saw their share price rise as commodities strengthened.