Greece halves surplus forecast as recession deepens

The Greek government on Wednesday predicted worse-than-expected recession next year and downgraded a rare positive note in its budget, highlighting the toll of repeated rounds of austerity.

The government more than halved its forecast for a budget surplus before debt interest payments are taken into account, dimming one of the few bright spots in a final next year budget bill.

Nearly bankrupt and reliant on aid from European partners and the IMF to survive, the bill showed steadily worsening economic prospects are wiping out much of the boost from spending cuts demanded by lenders.

Chaos marked the budget’s release as Greece’s two biggest labour unions called a 48-hour anti-austerity strike for November 6-7. The deputy finance minister cancelled a presentation due to a journalists’ strike and Greek bondholders angry at losses they suffered hurled eggs at the finance ministry’s budget division.

The budget showed Greece targeting a primary surplus of 0.4 per cent of gross domestic product next year, below the previous target of 1.1 per cent. That at least shows the country is on- track for a primary surplus for the first time since 2002.

Greece now expects the economy to contract 4.5 per cent next year – its sixth year of recession – up from the previous forecast of 3.8 per cent. Five years of recession have already shrunk the economy by a fifth and left a quarter of Greeks jobless.