The second quarter of 2012 was the Greek economy’s worst in the last eight years, and the outlook remains bleak despite the fact that the recession eased compared to the first quarter, Kathimerini writes.

The European Commission in May forecast that Greece’s economy will shrink 4.7 percent this year but ministers are reportedly much more downbeat now.

Debt-laden Greece depends on rescue loans from its European partners and the International Monetary Fund to keep paying for vital public services and servicing its loans. But reforms and austerity meaures that are key condition for Greece’s rescue loans have left the country plunging in recession. The latest official data, made public last week, showed a record 23.1 percent jobless rate for May, with almost 1.15 million people registered as unemployed.

If Athens fails to stick to its commitments for further cutbacks and reforms, the country could be forced to default on its obligations and potentially leave the eurozone.

Meanwhile, Greek coalition leaders have yet to finalise spending cuts of about 11.5 billion euros in order to unlock its next aid installment worth some 31 billion euros.

The cuts will be presented to the auditors of the country’s international EU, International Monetary Fund and European Central Bank creditors, who visited Athens recently and are expected to return in September. The two general elections in May and June caused serious delays in implementing their reform program, deepening the recession.

On Monday, deputy head of Merkel’s parliamentary bloc Michael Fuchs told German newspaper Handelsblatt that Berlin is ready to use its “veto” if Athens does not fully comply with the terms of the rescue packages.