Economy, Greece | featured news

The Greek government says its painful austerity drive is paying off, with the budget deficit reduced to 6.6 percent of annual output in 2012 from 9.4 percent a year earlier. A finance ministry statement Monday said that, not counting the cost of servicing Greece's debt mountain, the government posted a modest budget surplus of €434 million ($588 million) last year.

A sign taped to a wall in an Athens hospital appealed for civility from patients. "The doctors on duty have been unpaid since May," it read, "Please respect their work." Patients and their relatives glanced up briefly and moved on, hardened to such messages of gloom. In a country where about 1,000 people lose their jobs each day, legions more are still employed but haven't seen a paycheck in months. What used to be an anomaly has become commonplace, and those who have jobs that pay on time consider themselves the exception to the rule.

Some countries are hard-hit, like Portugal, Greece, and Italy in the case of textiles, but most countries actually come out ahead. So is rising Chinese productivity good? To quote Sam Shakusky, who’s to say? Portuguese workers certainly don’t seem to win from an increase in textile productivity. But most European workers actually come out ahead. What’s more, productivity growth will also almost certainly lead to rising wages in China, lifting hundreds of millions of people out of poverty and raising the standard of living considerably in the world’s largest country. That may be the most important factor here.

Finance ministry officials in Greece have calculated that the debt-stricken country's economy will recover faster and its debt be more sustainable if it is given two more years to reduce its budget deficit, a Greek newspaper reported on Saturday.

Starved of financing options, Greece will offer an unusually large amount of treasury bills next week so it can meet looming redemptions and fund its cash needs .

Greece's economy shrank further in the first three months of 2012, shriveling at a yearly rate of 6.5 percent against a backdrop of painful wage cuts, tax hikes and record unemployment.

As the prospect of Greece leaving the euro becomes more real by the day, economists are trying to figure out what would happen next, to the economy and to the markets.

Investors nervous about the changing political winds in Europe initially drove down the euro and sent stock markets falling across the region Monday morning, though markets were bouncing back later in the day following renewed signs of strength in the German economy.

Unemployment rose to 10.9 percent in April, the 11th monthly increase in row, and is likely to add to tension ahead of national elections in Greece and France on Sunday.