Greece is going for pain now in an attempt to produce a budget surplus in 2013 for the first time in a decade, but the economy is likely to shrink for a sixth successive year by up to four percent.
Since 2008 Greece’s economic output has shrunk by a quarter, and 2012 will likely produce another primary deficit of over one percent of GDP.
A primary deficit is one that excludes debt servicing costs, which in the eurozone’s most heavily-indebted country are enormous.
Seven point eight billion euros of the latest 11.5 billion to be sliced from public spending will fall next year as Athens seeks to impress the international money markets.
All this austerity has a price, with the economy continuing to contract through 2013. Some analysts are insisting the figures are too optimistic as structural reforms are being implemented too slowly to boost growth, and the general slowdown in the eurozone will hinder growth further.
With unemployment at a record 24.4% Greece’s unions are promising not to take these latest cuts lying down, but with domestic demand and production stagnant it is hard to see how much leverage they have with their own government, which seems currently more accountable to its creditors than its electorate.