PARIS (MNI) – The Greek economy will continue its sharp contraction
this year and next, but reforms are progressing and Greece is gradually
recovering its lost competitiveness, the Greek central bank said on
Monday.

In its interim report on monetary policy for 2012, the Bank of
Greece said that the country “now faces fresh circumstances that – under
certain conditions – open up new prospects for the economy.”

While the fiscal tightening and decline in domestic demand that
have kept the economy in recession for five years are set to continue,
the central bank said uncertainty about Greece’s commitment to reforms
and its place in the Eurozone is gradually diminishing.

“The Eurogroup statement of 26-27 November and the strong
reassurances of our partners that Greece will remain in the euro area
are a major step forward,” the report said.

Economic prospects in the near term are set to remain difficult,
however, the central bank said. The economy will likely contract by
slightly more than 6% this year and by 4% to 4.5% in 2013, with
unemployment probably exceeding 26%, the report said.

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–Paris newsroom, +33142715540; jduffy@marketnews.com

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