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Business

Shrinking Greek economy cause for optimism?

The Greek government has said it's making progress in consolidating public finances. It said the economic contraction had slowed down and emphasized the country even logged a surplus in the primary budget.

Greece's gross domestic product (GDP) dipped by 4.6 percent in the second quarter year-on-year, the government in Athens reported Monday. The economy thus shrank far less than expected by analysts who had penciled in a 5 percent drop on average, following a 5.6 percent contraction between January and March.

The second-quarter estimate from the statistics authority came in the sixth year of recession since the southern European eurozone nation was overwhelmed by the bloc's debt crisis.

The EU executive for its part had predicted Greece's economy would shrink by another 4.2 percent throughout 2013, but expressed the hope that it might pick up next year, with growth expected to log 0.6 percent.

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New haircut for Greece?

Athens announced it had made big strides in reining in the country's public spending. It said it had booked a surplus of 2.6 billion euros ($3.5 billion) for the first half of the current year, up from a deficit of 3.1 billion euros according to the government's earlier forecast.

The primary budget does not include any debt servicing, prompting economists to reiterate that Greece is still far away from a balanced budget in real terms.

Germany's central bank was reported as saying at the weekend that Athens would need yet another bailout package in 2014 after having been dependent on international creditors' rescue funds since 2010.

hg/dr (dpa, AFP, Reuters)

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