Greek premier says economic pain will ease next year

By Lefteris Papadimas and Karolina Tagaris

ATHENS (Reuters) - Greece's economic pain will ease in 2014 as it exits a recession that will be less acute than forecast this year, helping the country meet its bailout targets, Prime Minister Antonis Samaras said on Saturday.

The country is struggling through a six-year slump that has shrunk its economy by more than a quarter, left more than one in four of the workforce jobless, pushed up poverty levels and shuttered thousands of businesses.

The European Union and International Monetary Fund, which have bailed the country out with two multi-billion euro rescue packages, project gross domestic product will shrink 4.2 percent this year after contracting 6.4 percent in 2012.

But Samaras, addressing an annual trade fair in Greece's second city of Thessaloniki, said the 2013 slump would be "smaller than forecast". He promised Greeks worn down by the country's worst post-war crisis a return to growth next year.

In a speech branded "delirious" by the leftist opposition Syriza party ahead of planned anti-austerity rallies in the city, Samaras said: "This year was the hardest, the most crucial, and it turned out to be the most successful.

"It was the hardest... because Greece paid for all the sins of the past".

In a sign the country's long slump may indeed be bottoming out, data this week showed the economy shrank 3.8 percent in the second quarter, helped by a rebound in tourism. That was the narrowest annual decline in nearly three years.

Greece's lenders expect a return to anemic growth of 0.6 percent in 2014 for an economy that has slumped 23 percent since 2008, while austerity measures have crippled private consumption and unemployment risen to 27 percent.

The lenders expect that rate to edge down to 26 percent next year, and economic growth to pick up faster after 2015.

'LIKE A THIEF'

Samaras said Athens would beat this year's main fiscal target of achieving a surplus on its primary budget, which excludes debt financing, allowing it to seek further debt relief from its euro zone partners.

"Greece is sticking to its promises and attaining its goals. The only thing needed is for our lenders to also keep their promises," he said.

Excluded from financial markets since 2010, Greece has been kept afloat solely with 240 billion euros in loans and, under the current program, will be financed until the second half of 2014. The IMF and Greece estimate that Athens will need an extra 10-11 billion euros in 2014-2015.

The euro zone is likely to agree to further financing in November, after the "troika" of EU, ECB and IMF inspectors, due in Athens on Sept 22, finish an assessment of its efforts to carry out painful reforms.

The reforms include selling off state assets and a deeply divisive plan for a transfer and layoff scheme for 25,000 public workers - mainly teachers and municipal police - that has triggered marches, rallies and strikes in protest.

Dozens of municipal police officers holding banners reading "No to firings!" rallied outside the hall where Samaras was speaking. About 4,000 police officers were deployed to the streets.

As he did last year, Samaras broke with tradition and made only a brief appearance to inaugurate the prominent event rather than making the customary annual economic policy speech delivered by his predecessors.

"Like a thief at TIF (Thessaloniki International Fair)," the leftist Avgi newspaper screamed on its front page on Saturday.

He was due to return to Athens later on Saturday before anti-austerity groups and workers unions, among them municipality employees, fire brigade and coast guard workers, take to the city's streets.

Syriza accused Samaras of being out of touch with the reality of 1.5 million jobless Greeks.

"The main question the prime minister left hanging was if he knows which country he lives in," Syriza said.

(Additional reporting by John Kolesidis in Thessaloniki; Editing by John Stonestreet)