The Greek economy has shrunk by more than a quarter since 2008, and continued to plunge at the beginning of the year without adjusting for seasonal effects, although at a slower velocity. While Greece’s official statisticians do not make such adjustments, statistics agencies in most countries adjust quarterly data to reflect the fact that economic activity typically picks up at the end of a year and slows at the beginning of the next.Another euro zone trouble spot, Portugal, also performed less dismally than expected. Its economy shrank 0.1 percent in the first quarter from the previous quarter, compared with a 1 percent decline that analysts had forecast.Portugal, which is seen as having done more than Greece to improve economic performance, may have benefited from stronger exports. But Mr. Fois of Barclays said a recovery probably remains distant.“Expecting sustained growth in the short term would be a bit optimistic,” he said. “You still have a lot of fiscal austerity to come through.”Germany has benefited from the European Central Bank’s low lending rate of 1 percent, a benchmark that is set with the euro zone as a whole in mind but is probably too low for German conditions.While credit is tight in much of Europe, it is still available in Germany at inexpensive rates that have pushed up real estate prices in urban areas. German wages are also likely to rise as companies have trouble finding skilled workers, fueling inflation which is already above the official target of about 2 percent.Higher wages and inflation in Germany are likely to trouble some policy makers and segments of the German public, but may be good news for other countries in Europe. They would have an easier time competing with Germany for investment, while higher wages might increase German demand for their products.

via Euro Zone Economy Skirts Recession – NYTimes.com.