Greek economy remains in recession, GDP contracts 7 per cent

Feb 14, 2012, 13:56 GMT

Athens - The Greek economy remained stuck in a deep recession in the fourth quarter, according to official figures released on Tuesday, clearly indicating the effects harsh austerity reforms are having on the economy.

Gross domestic product (GDP) contracted by 7 per cent, the country's statistics office said. The contraction followed a 5 per cent GDP decline in the previous quarter.

Greece, currently in its fifth year of recession, has been relying on rescue loans from EU countries, the International Monetary Fund (IMF) and the European Central Bank to avert bankruptcy.

On Tuesday, a government spokesperson said the country was also willing to cut an additional 325 million euros (428 million dollars) in public service spending, a condition it needs to meet to secure a second international bailout.

The pledge comes on top of 3 billion euros in savings it has already agreed to make in order to qualify for a 130-billion-euro bailout.

Government spokesman Pantelis Kapsis said Greece had until Wednesday - when eurozone finance ministers are due to meet in Brussels - to provide its international partners with written guarantees that it will honour the terms of the bailout.