Greeks set new strikes, economy firmly in recession

* Greek unions to march Wednesday, set strike for May 20

* Unions oppose pension reform, wage cuts

* Austerity package seen deepening recession

* Greek economy contracted 0.8 pct in first quarter

By Renee Maltezou and Ingrid Melander

ATHENS, May 12 (BestGrowthStock) – Greek unions announced on
Wednesday that they would stage a 24-hour nationwide strike on
May 20, the second major protest against tough austerity
measures pledged in exchange for billions of euros in aid.

The main public and private sector led a 50,000-strong march
a week ago in which hundreds of angry Greeks fought pitched
battles with police in the streets of central Athens and three
people were killed in a petrol bomb attack on a local bank.

They are due to march in the capital on Wednesday from 6
p.m. (1500 GMT), in a rally which will give indications about
the public mood before the big walkout next week.

Investors are closely watching public reaction to government
wage and pension cuts amid concerns broader unrest could hit
Prime Minister George Papandreou’s resolve in pushing them
through.

New figures published on Wednesday showed Greece’s economy
contracted 0.8 percent in the first quarter compared to the last
three months of 2009.

The austerity measures, pledged in return for 110 billion
euros ($139.7 billion) in emergency aid from the European Union
and International Monetary Fund, are expected to keep the
economy in recession through 2011.

“The IMF will not stop thirsting for workers’ blood,” said
Yannis Panagopoulos, chairman of Greece’s main private sector
labour union GSEE. “Its recipes are a disaster and the
government must turn them down.”

The country’s socialist government on Monday unveiled a
draft law to raise the average retirement age and cuts benefits,
which further angered unions already opposed to previous steps
including public wage cuts and tax hikes. [ID:nLDE63E12Z]

RECESSION

The first quarter contraction was not as bad as economists
expected, but the austerity steps are expected to sharply
curtail domestic consumption, a key driver of Greece’s 240
billion euro economy.

Data showed the economy shrank by 2.3 percent year-on-year
in the first three months of the year. The government sees the
economy shrinking by 4 percent over the full year.

Nikos Magginas, an economist at National Bank of Greece,
said he expected the pace of contraction to accelerate in the
next two quarters as wage cuts hit disposable incomes and
uncertainty about economic prospects increased.

Opinion polls show that a strong majority of Greeks believe
the measures are unfair and that most favour continued strikes
and protests. Many Greeks are demanding that Papandreou take
concrete steps to punish corrupt officials they believe are
responsible for leading the country down an economic dead-end.

The protest last week unleashed the worst violence the
country has seen since riots in 2008 and Wednesday’s rally will
show whether the unions can maintain their momentum.

The May 20 walkout will take place a day after a 8.5 billion
euro 10-year Greek bond matures, an event which pushed Greece to
seek aid.

The country expects to get a first instalment of 20 billion
euros in aid from the EU and IMF to help it refinance the debt.

Global policymakers agreed last week an emergency rescue
package worth about $1 trillion to stabilise world financial
markets and prevent the Greek debt crisis from spreading and
destroying the euro currency.

Stocks

(Additional reporting by Angeliki Koutantou and Harry
Papachristou; Writing by Ingrid Melander; Editing by Noah
Barkin)

Greeks set new strikes, economy firmly in recession