March 20, 2012 / 11:54 AM / in 6 years

Greek current account gap shrinks sharply in January

ATHENS (Reuters) - Greece’s current account deficit shrank 46 percent year on year in January, helped by a smaller trade gap, the country’s central bank said on Tuesday, in a rare bit of good news for the recession-hit economy.

Greece's Finance Minister and new leader of the PASOK Socialist party Evangelos Venizelos (R) greets outgoing leader George Papandreou in Athens March 19, 2012. Venizelos said on Monday he was stepping down as finance minister to lead the Socialists into a general election, a day after taking over the helm of the party, which is trailing far behind its rival conservatives in opinion polls. The logo reads "We Begin". REUTERS/Yorgos Karahalis

The deficit narrowed to 1.5 billion euros ($1.98 billion) from 2.75 billion in the same month in 2011, the Bank of Greece said.

A key indicator of macroeconomic imbalance, the current account gap reflects eroded economic competitiveness, in part due to wage increases above productivity.

“The current account gap shows significant improvement in January, helped by the continuing growth of exports, a marked drop in the volume of fuel imports and lower outlays for tourism and transport services abroad,” said Nikos Magginas, an economist at National Bank of Greece.

He expects the narrowing trend to gather pace in the rest of the year, especially if the contribution from tourism and shipping accelerates from the second quarter onwards.

Greece shrank its current account gap to 9.8 percent of gross domestic product last year from 10.5 percent in 2010 and 11 percent in 2009.

The central bank sees the deficit narrowing further to about 7 percent of GDP this year.

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KEY FIGURES (bln euros) 2012 2011

January -1.492 -2.757

2011 2010

December -2.172 -1.819

November -2.303 -2.483

October -1.503 -2.252

September -1.097 -1.251

Year-to-December -21.070 -22.976

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DATA IN DETAIL (bln euros)

Jan 2012 Jan 2011

Trade balance -2.338 -3.232

Exports 1.744 1.399

Imports 4.081 4.630

Services balance 530 312

Income balance -474 -518

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source: Bank of Greece

Reporting by George Georgiopoulos and Tatiana Fragou; Editing by Ingrid Melander, John Stonestreet

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