By: Sara Patterson

Despite strict austerity measures, it has now been confirmed that Greece will miss its deficit target this year. This announcement caused stock markets to plummet further, on the heels of last week’s deplorable end to Q3, which saw the biggest quarterly losses since 2008.

According to the country’s budget draft that was released today, Greece's economy will continue to shrink by 2.5 percent in 2012, compared with a 5.5 percent contraction this year. As a result, Greece’s deficit in 2012 is expected to be 6.8% of the GDP, rather than 6.5% as demanded as part of the bailout program. The draft budget also showed that 2011’s deficit would be 8.5% of the country’s GDP, significantly higher than the 7.6% set forth in the bailout program offered by the IMF.

Uncertainty about potential Greek debt default has sent investors flocking to take refuge in safer assets such as German Bunds, while the Euro fell to an 8-month low during the Asian session. As a direct response to Greece’s announcement, Wall Street also opened lower today, with the Dow Jones industrial average slumping 46.09 points, the Nasdaq Composite Index dropping 14.60 points, and the S&P 500 Index falling 4.90 points.

17 EU/IMF leaders will meet again on October 13th to discuss Greek’s dismal outlook and to make decisions about how and when to release funds. The decision will not be made today as originally expected.