ATHENS - The Greek economy is set to shrink by more than expected this year, the government said on Wednesday, as it braced for nationwide strikes protesting its plans for bringing the country's budget deficit under control.

Greece, grappling with a ballooning deficit and a $409 billion debt pile, told the European Union that 2010 gross domestic product would "most likely" shrink by more than the 0.3 per cent currently forecast.

It also said the drop may exceed an alternative, more pessimistic, scenario published in Greece's Stability and Growth Programme in January envisaging a 0.8 per cent contraction.

Economists and ratings agencies have warned that a sharper than expected slowdown in the economy is one of the biggest threats to Greece's commitment to cut its budget deficit to 2.8 per cent 2012 from close to 13 per cent last year.

The finance ministry said it could not provide precise GDP estimates, citing planned revisions to data against which 2010 numbers will be calculated, but a finance ministry official said a new forecast should be ready by the end of April.

"I estimate the economy will contract by 2.8 percent," said Gikas Hardouvelis, Chief Economist at EFG Eurobank and professor of economics at the University of Piraeus.

"Consumption will decline about 5 per cent after (austerity) measures which will curtail incomes in the public sector," he said. adding that the government's deficit goals should still be attainable given there was still room to cut spending in some areas to address any further revenue shortfall.

Another key concern among economists is whether the government has the will and the support it needs to deliver on its budget commitments.

Recent opinion pollsindicate overall support for the government, elected in October, has remained relatively steady but reveal deep divides over the fairness of VAT hikes, cuts in bonuses for civil servants and a pension freeze.