Greek construction shrinks for sixth year in 2011

Building volume has shrunk 77 per cent from peak in 2005
By Harry Papachristou
||Last Updated: 03/29/2012

ATHENS (Reuters) - Greek construction shrank for a sixth consecutive year in 2011 and is unlikely to recover in 2012, hit by a tax onslaught and an investment slump caused by European Union/International Monetary Fund-imposed austerity policies, statistics service (ELSTAT) data showed on Thursday.

Building activity in terms of volume contracted by 38 per cent last year to 23.2 million cubic metres — just one-fifth of its level in 2005, the sector's last year of expansion.

Building is a key growth driver for Greece's 215 billion euro (C$285.70 billion) economy and the hardest hit from the austerity policies adopted to deal with the country's debt crisis.

Almost one-half of the country's construction workers have lost their jobs since 2007, according to ELSTAT figures.

Titan, the country's biggest cement producer, did not pay a dividend to shareholders for the first time in 58 years after demand for cement crumbled to its lowest level since the 1960s.

Analysts do not expect the sector to recover this year, weighed down by unsold stock of about 250,000 homes.

"Even in normal times, this stock would be enough to cover two years of demand," said Nikos Magginas, economist at the National Bank of Greece.

Bank credit and households' disposable income have been falling and demand for new homes has been additionally hit by a raft of property taxes imposed to fill government coffers as part of the country's EU/IMF bailout.

Greece is going through its worst recession since the Second World War. Its economy is expected to shrink for a fifth consecutive year in 2012, having contracted by about one-fifth since 2007, its last year of expansion.

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