UPDATE 1-Greek dives into first recession in 16 years

ATHENS, Nov 13 (Reuters) - Greece on Friday reported a fourth consecutive contraction in the third quarter, and revised down earlier data to show it slipped into its first recession in 16 years at the very start of this year. The 0.3 percent fall in the three months to September was better than a forecast by analysts polled by Reuters, one bright point for Athens, which has been told by the European Union to cut its ballooning budget deficit at a time when most of the euro zone is emerging from recession. Other data on Friday showed Europe's recovery gained traction in the third quarter, with Germany and France reporting further growth and Italy's economy starting to grow too, lifting the euro zone and wider European Union out of recession. Both Eurostat and the Greek National Statistics Service revised second quarter data to a 0.1 percent drop, from a previous 0.2 percent positive growth. The Greek economy had already suffered two consecutive quarters of falling growth in Q1 2009/Q4 2008, the revised data also showed. Analysts said the outlook for Greece was bleak, although the 250 billion euro economy did perform better than expected in the third quarter. Economists polled by Reuters had forecast a 0.8 percent quarterly drop. Year-on-year the Greek economy shrank by 1.6 percent in the third quarter, while analysts had forecast a 1.4 percent fall. "The figures show that the Greek economy is going through a very difficult period and, unfortunately, we do not see an easy way out," said Diego Iscaro, at IHS Global Insight. "Unemployment is rising, credit conditions remain tight, and taxes are going up. All these factors will weigh down on consumer expenditure during the remaining of the year." The new Socialist government, which won an election on Oct 4, pledged last week to save the debt-ladden country from bankruptcy but has forecast a 1.5 percent GDP contraction for 2009. (Reporting by Ingrid Melander, Harry Papachristou and Angeliki Koutantou; editing by Patrick Graham) Keywords: GREECE GDP/ ([e-mail] ; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.