GDP shrank by 6.8 per cent in 2011, taking output 16 per cent below its pre-recession peak and close to the record for the deepest slump of modern times – Latvia’s 24 per cent following the crisis in 2008.
Such gloomy data with no sign of any end in sight is prompting increasing numbers of economists to argue the country would be better off out of the Eurozone.
“European politicians, including those in Greece, say leaving the currency union would lead to depression – but entering it has already caused one,” said Jamie Dannhauser from Lombard Street Research.
“It is not remotely clear that the upfront costs of a euro exit would have been materially higher than the damage currently being caused; and there are good reasons to believe the country’s longer-term outlook would be improved.”
However, Greek Prime Minister Lucas Papademos is still ploughing on with austerity and bailout packages in an effort to keep the country from reverting to the drachma.
Meanwhile the Portuguese economy contracted by 1.3 per cent on the quarter and 1.5 per cent in 2011 as a whole.
Spain’s 0.3 per cent contraction in the final quarter of 2011 has also been blamed, as it is Portugal’s main export market.