Monday Mar 19, 201211:04 PM GMT
Bank of Greece says economy to contract 4.5% in 2012
People walk past the Bank of Greece headquarters in Athens, March 7, 2012.
Mon Mar 19, 2012 11:1PM
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The Bank of Greece has estimated that the country's economy will contract by 4.5 percent in 2012 and linger in mild recession next year.

In its annual report released on Monday, the central bank also said it expected unemployment in Greece to exceed 19 percent on average this year.

The Greek economy shrank by almost seven percent last year, with nearly 18 percent of the workforce unemployed.

The report said the budget deficit for 2011 stood at over 10.5 percent.

The dismal predictions by the bank have eclipsed the coalition government's recent achievement in successfully negotiating financial rescue deals with private creditors, lenders from the eurozone, and the International Monetary Fund (IMF).

On Thursday, the IMF approved a loan to Greece worth about 28 billion euros (36.7 billion dollars). IMF Managing Director Christine Lagarde announced the loan plan on March 9.

Lagarde said in a statement issued on March 9 that the loan plan was arranged to support Greece’s “ambitious economic program over the next four years.”

Eurozone finance ministers have approved two bailout packages for Greece over the past two years.

The first bailout, worth 110 billion euros (147 billion dollars), was approved on May 2, 2010, and the second package was approved on February 21, 2012 and is worth more than 130 billion euros (174 billion dollars).

Also on Monday, Greek Finance Minister Evangelos Venizelos resigned, one day after he was elected to lead the Panhellenic Socialist Movement (PASOK), which is the main party in the coalition government.

Venizelos will guide PASOK in the upcoming general elections, which are likely to be held in late April or early May.

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