Greece Economic Outlook
Annual economic growth accelerated to 2.7% in Q2 from 2.0% in Q1. The improvement was chiefly driven by stronger private consumption growth amid falling inflation and a resilient labor market. Turning to Q3, available data paints a mixed picture. In July, industrial output declined in annual terms, while merchandise exports continued to plummet. On the flip side, economic sentiment strengthened in July–August, buttressed by improvements in the retail and services sectors. In other news, after Scope Ratings restored Greece’s investment-grade rating in August, this month DBRS followed suit, upgrading the country’s rating to ‘BBB-‘. Meanwhile, Moody’s raised its rating to ‘Ba1’, still within the non-investment-grade class. The upgrades were driven by robust economic growth, a strong commitment to fiscal prudence and declining public debt.
Harmonized inflation was stable at 3.5% in August, as softer price pressures for food, as well as housing and utilities, offset a rebound in transportation inflation. Our panelists see inflation averaging below current levels over remainder of the year amid tight monetary policy. Commodity price spikes pose an upside risk to the outlook.