Greece Economy Expands In Q1. The Greek economy expanded in the first quarter, in contrast to the contraction estimated previously, data from the Hellenic Statistical Authority showed Friday.. Gross domestic product grew 0.4 percent sequentially in the first quarter instead of 0.1 percent fall estimated on May 15. The expansion reversed fourth quarter’s 1.1 percent decline. The upward revision to first quarter GDP suggested that the economy was not in recession. Year-on-year, the economy expanded 0.4 percent compared to the previous estimate of 0.5 percent decline and the 1 percent fall in the fourth quarter. On a non-seasonally adjusted basis, GDP advanced 0.8 percent annually versus prior estimate of 0.3 percent fall. The government, keen to wrap up a bailout review and get more clarity on further debt relief from its official lenders, has downwardly revised this year’s growth projection to 1.8% from 2.7% previously.
It expects the recovery to strengthen next year with gross domestic product growing by 2.4%. The EU Commission has also cut its economic growth forecast for Greece to 2.1% growth this year from 2.7% previously. A recovery will be key to bringing down an unemployment rate of nearly 23%, the highest in the euro zone, and attaining a projected primary budget surplus of 1.75% — excluding debt servicing outlays — demanded by Greece’s creditors.
The main drivers behind the rise in first-quarter economic output were stronger consumption and gross capital formation, offsetting a negative contribution from net exports. Consumption rose 0.4% compared to the fourth quarter, with imports rising by 4.5% while exports declined 2.3%. Gross capital formation jumped 48.3% from the previous quarter.”Based on this revision, the government baseline scenario of 1.8% full-year growth in 2017 looks pretty attainable,” said National Bank economist Nikos Magginas.
“The surprise was that consumption proved more resilient than expected during a difficult quarter marked by uncertainty over the bailout review talks.” Had there been a positive contribution from net exports, we would have seen growth of more than 1.0% in the first three months, he said.
Sources: RTTNews, GT, Hellenic News, EU Debt Report17, BBC News, Reuters.