Greece’s economy went back into recession in the first quarter as a standoff with its international creditors renewed doubts about its place in the euro area. Gross domestic product contracted 0.2 per cent in the three months through March after shrinking 0.4 per cent in the previous period, the European Union’s statistics office in Luxembourg said Wednesday.

The median estimate in a Bloomberg survey was for a 0.5 per cent drop. Greece last year emerged from its worst slump since World War II, which wiped out about a quarter of economic output and left one in four people without a job. That backdrop drove Prime Minister Alexis Tsipras's government to power in January elections on a pledge to push the country's euro-area partners to ease the country's bailout conditions. Instead, liquidity has dried up as the euro area and International Monetary Fund have held firm that

Greece must adhere to terms agreed by previous governments and withheld loans from the €240 billion bailout. The economy expanded 0.8 per cent in 2014 after six years of contraction wiped out about a quarter of the nation's output. The European Commission last week cut its forecast for Greek GDP growth this year to 0.5 per cent from a previous forecast of 2.5 per cent.

Bloomberg