BRUSSELS (MNI) – Greece will emerge from its deep recession in the
second half of next year, and the economic recovery will gain momentum
in 2012, the European Commission said on Monday in its Autumn economic
forecasts.

The Commission projects that Greece’s GDP will contract by 4.2%
this year and 3.0% next year. In 2012 it predicts GDP growth of 1.1%.

“Growth is expected to turn around positively in the second half of
[2011], with the recovery gaining further momentum in 2012,” the
Commission document said.

It said the recovery will be “entirely driven by the external
sector” because of a contraction in domestic demand and shrinking
imports.

“Market pressures and high spreads have been keeping up the cost of
and limiting private sector access to financing,” the Commission said in
its report. “Credit expansion has been decelerating on the back of
tighter credit conditions and high household indebtedness,” it said.

The Commission forecast that Greece’s annual inflation rate will be
4.6% this year, 2.2% next year and 0.5% in 2012.

It’s budget deficit, the Commission said, will be 9.6% of its GDP
this year, 7.4% next year and 7.6% in 2012. The EU limit on budget
deficits is 3% of GDP.

Greece will have total government debt of 140.2% of its GDP this
year, 150.2% next year and 156.0% in 2012, the Commission forecast.

Earlier this year, Greece accepted a E110 billion bail out package
from its Eurozone partners and the International Monetary Fund in
exchange for implementing a package of austerity measures.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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