There’s only one tiny glimmer of good economic news coming out of Greece these days – the small uptick in industrial production – and the grimmer headlines will continue to overshadow it.

Industrial production in the eurozone’s most troubled member nation, Greece, is on the rise – at last.

But before you break out the champagne and begin the celebration, you might want to pause and ponder just how much ground the Greek economy will have to make up in the coming years, and how dire its current situation remains. True, the latest data released last week shows that output grew 0.3% during June over the previous year’s level. But, in contrast to other Eurozone nations – including Italy and Spain – Greece’s industrial production has been in freefall since 2008, diving further and more consistently than has been the case elsewhere, as shown in this week’s Chart of the Week.

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More than offsetting a whisper of good news on the industrial production front is this morning’s news that Greece’s GDP fell by 6.2% in the second quarter, following a 6.5% contraction in the first quarter. Moreover, last week we also learned that the unemployment rate in Greece has soared still further, to hit 23.1% in May and nearly 55% of those between the ages of 15 and 24. That likely could climb still further, given that the government has said it plans to axe the jobs of some 40,000 civil service workers in order to meet the cost savings targets laid down by international lenders when they agreed to restructure Greece’s massive debt burden.

Even if industrial production has eked out a tiny gain, economists in the Reuters poll expect the economy as a whole to shrink even more than they did a few months ago. The economists polled now suggest that the Greek economy will contract by a total of 6.6% this year and another 2% in 2013. Progress on the budget deficit isn’t much more encouraging: they expect to see it diminish slightly to 8% this year from 9.3% in 2011 – but that is still well above the target of 7.3%.

True, a higher number of economists polled by Reuters recently believe that Greece now will stay in the Eurozone – 45 out of 64 of those polled, compared to 35 out of 64 questioned back in June. But many of those pundits believe a “Grexit” can only be avoided if the country continues along the path of austerity – the path that has led to the sky-high unemployment rate and political turmoil. This will be a difficult balancing act for Greece’s leaders.

 
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