Greece's economy to exit recession only by 2014

WASHINGTON — Greece's economy is expected to exit recession only by 2014, the International Monetary Fund said Thursday after announcing a new bailout loan for the heavily indebted country.

The IMF projected the Greek economy would shrink about 4.8 percent this year, followed by zero growth in 2013 and a return to growth, at an annual rate of 2.5 percent, in 2014.

The global lender estimated that Greece's gross domestic product, a measure of economic activity, fell 6.9 percent in 2011.

The new numbers marked significant downward revisions from the IMF's prior GDP estimates in December: a contraction of 6.0 percent in 2011, followed by a 3.0 percent contraction in 2012 and growth, albeit a mere 0.3 percent, in 2013.

The IMF forecast that Greece's debt level would climb to 167 percent of GDP in 2013 but then steadily fall to 117 percent by 2020.

That would put Greece below the 120 percent maximum debt-to-GDP ratio required under the new European Union-IMF bailout plan for the country.

The IMF approved a new 28 billion euro ($36.7 billion) loan for Greece on Thursday, part of the EU's huge rescue package.

"Greece has made tremendous efforts to implement wide-ranging painful measures over the past two years, in the midst of a deep economic recession and a difficult social environment," IMF managing director Christine Lagarde said in a statement.

"However, the challenges confronting Greece remain significant, with a large competitiveness gap, a high level of public debt, and an undercapitalized banking system."