Greece: Greece's economy worsens at the start of the year
May 30, 2016
Greece’s crisis-hit economy worsened in the first quarter of the year, as more complete data released on 30 May by the Hellenic Statistical Authority (EL.STAT) confirmed. While a flash estimate had indicated that the economy contracted 1.2% over the same period last year, more detailed data show that GDP contracted by 1.3%. The result came on the back of a broad-based deterioration of the economy, which shows no signs of a quick turnaround from the crisis.
Domestic conditions worsened in the first quarter amid plummeting consumption and fixed investment. Private consumption, which has been decimated by a number of austerity measures and high unemployment, fell 2.0% in Q1—the worst result in almost two-years (Q4: -1.2% year-on-year). Government consumption also returned to contraction, as the government is trying to rein in spending to meet budget targets, and contracted 1.5% (Q4: +2.8% year-on-year). In addition, fixed investment fell 1.6%, contrasting Q4’s 4.9% increase, amid a bleak business climate.
The external sector continued to contribute positively to growth, although it provided less support than in Q4. Exports deteriorated, plummeting 14.3%, which followed the fourth quarter’s 10.4% fall. Greece exports a number of refined oil products, whose value has fallen sharply due to the subdued-oil-price environment. Meanwhile, the drop in imports moderated slightly, falling 11.5% in Q1 after decreasing 11.9% in Q4. Overall, the external sector contributed plus 0.4 percentage points to growth in the first quarter of 2016, which was down from plus 1.4 percentage points in Q4 2015.
On a quarterly basis, the economy grew 0.1% in Q4 in seasonally-adjusted terms, which contrasted the 0.6% contraction reported in the preliminary figure. The result suggests that the Greek economy is doing better than previously expected although it remains in a feeble state.