Economic sentiment unchanged in February amid slump

Greek economic sentiment was unchanged in February as new austerity measures agreed to in exchange for a second bailout package threatened to deepen the country’s recession.

An index measuring short-term economic trends stood at 74.9 for a second month, down from 75.7 in December, the Athens-based Foundation for Economic & Industrial Research, known as IOBE, said in an e-mailed report Monday. Consumer confidence dropped 3.4 points to minus 83.5, the foundation said.

Greece’s government last month committed to additional austerity measures and negotiated terms for the biggest debt restructuring in history to secure a 130 billion-euro ($172 billion) aid package from the European Union and International Monetary Fund.

“Uncertainty over the country’s economic course remains as the Greek economy’s loan program is connected to structural reforms which will, at least in the short-term, intensify the recession and unemployment,” IOBE said. “However, lifting the currency danger, recapitalization of banks and the gradual improvement of the country’s image abroad” are expected to lead to an improvement in sentiment, according to IOBE.

Greece’s economy is set to shrink for a fifth year in 2012 after a 6.8 percent contraction last year. Unemployment jumped to 21 percent in November, according to the Hellenic Statistical Authority. [Bloomberg] - 

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