Greece’s economy shrank by 0.2 per cent in the second quarter compared with the same period in 2013 – the smallest contraction since 2008, official figures show.

The April-June figure, which follows a 1.1 per cent contraction in the previous quarter, suggests that Greece will hit this year's official target of positive output growth of 0.5 per cent, according to Athens-based economists.

Platon Monokroussos, chief market economist at Eurobank in Athens, said that on the basis of unofficial quarter- on-quarter figures, the turnaround had already begun, with the economy showing growth of 0.7 per cent in the second quarter.

Mr Monokroussos said output was driven by a strong start to the tourist season and improving private consumption.

Greek hopes of recovery will not have been encouraged by yesterday's euro zone industrial production figures, however, with the Eurostat data showing an unexpected contraction in June on the back of conflict in Ukraine, Iraq and and Gaza.

Expectations

Factory output fell 0.3 per cent on the month in June after a 1.1 per cent drop in May, compared with market expectations of a 0.3 per cent rise.

Production was flat compared with a year ago, after rising an upwardly revised 0.6 per cent rise in May. The annual reading was the lowest since August 2013. – Copyright The Financial Times Limited 2014/additional reporting Reuters