Monday, December 17, 2012

Aid to Ease Greece's Strain, but Hard Year Looms

Wall Street Journal
December 17, 2012

Greece is due to receive about €34 billion ($45 billion) in bailout aid this week that will ease strains on an economy that many pundits forecast would be forced out of the euro-zone this year, but a European Union report warned Monday that the country's economic struggles are far from over.

Finance ministers from the 17-nation currency bloc backed the aid payment at a meeting last week, their governments hoping that the move would lift the air of crisis that has surrounded the government's finances almost continuously since its debt problems emerged three years ago. For Germany, Greece's biggest government creditor, keeping a lid on the Greek crisis next year is critical to ensuring a turmoil-free run-up to elections next fall.

But the report on Monday made clear that Greece will continue to battle under the burden of heavy debts, a tough economic-reform agenda and an economy, in recession since 2008, that will continue to shrink in 2013. A senior EU official who briefed reporters on the contents of the review of Greece's economic performance said the economy could contract by more than the 4.2% officially forecast for 2013.

Cuts in public spending have already resulted in shortages in basic medical supplies at public hospitals. More than half of those under the age of 24 seeking work can't find any, and one-quarter of the entire workforce is jobless.


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