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IMF cuts Greece forecast but sees bondholder deal

The International Monetary Fund (IMF) said on Tuesday it anticipates a deeper recession for Greece through 2012, but expressed optimism for a deal with private bondholders to help make the country's debt more sustainable.

December 14, 2011 11:02 by

In a staff report issued in connection with last week’s release of a 2.2 billion-euro ($3 billion) aid tranche, the IMF said it revised gross domestic product projections downward due to less favorable external demand, a contraction in bank credit and slow progress on reforms to improve the investment climate.

The Fund said that a growth inflection point expected in late 2011 has not materialized, so Greece’s 2011 GDP will contract 6 percent for 2011 from a previous forecast for a 5.5 per cent decline. For 2012, it revised GDP growth to a 3 percent contraction from a 2.75 percent decline. (Reporting by David Lawder; Editing by Andrea Ricci)

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