Monday, August 12, 2013

Greece: A Primary Budget Surplus, Depression Continues

by Bill McBride on 8/12/2013 09:53:00 AM

From the WSJ: Spending Cuts in Line With Commitments to Creditors But Economy Continues to Contract. First the good news:

Budget data from Greece's central government showed Monday a primary surplus for the first seven months of the year, turning around a steep deficit seen the previous year, according to the country's Finance Ministry.

The data showed that the primary surplus reached €2.6 billion ($3.47 billion) against a deficit of €3.1 billion a year earlier.

The data, which don't include payments on debt interest, local government and social security fund budgets, show that Greece is likely to secure a primary budget surplus for the year, for the first time in more than a decade.
And then the bad:
Greece's improving fiscal performance, however, has taken a toll on its economy, which is contracting for a sixth straight year under the weight of austerity.
...
Greece expects the economy to shrink by 4.2% this year, though government officials have indicated that a stronger-than-expected tourism season this summer could provide some relief to the economy and result in a milder contraction of some 4% for the year. Many private-sector economists believe that this is too optimistic and that the economy could shrink for another year after the country's jobless rate hit 27.6% in May.
Maybe there will be a change in plans after the German election in September, but right now they are creating an economic wasteland and calling it progress.