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Economy to shrink 5 per cent in 2012: central bank

The economy will contract by a steeper-than-expected 5 percent this year, the central bank chief said in a speech to the bank's shareholders

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26 Apr 2012

The economy will contract by a steeper-than-expected 5 percent this year, the central bank chief said in a speech to the bank's shareholders.

Last month, the bank in March had forecast a 4.5 percent contraction in the economy this year.

Bank of Greece governor Yiorgos Provopoulos said the country must stick to its reform and fiscal adjustment commitments under a bailout plan agreed with its euro zone partners and the IMF to return the economy to growth.

He also warned that the country's membership in the eurozone was at stake if it failed to follow through on its pledges to reform, especially after national elections on May 6.

"If following the election doubts emerge about the new government and society's will to implement the programme, the current favourable prospects will reverse," he said.

He said the euro zone was set for a mild recession this year which could deepen if the debt crisis escalates.

Source: Reuters, Athens News

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