Greece Economic Forecast

Year-on-year economic growth was likely lower in Q2 than in Q1. Industrial production growth more than halved to 0.6%, and merchandise exports plummeted by double digits, likely due to the weak state of the global economy. Moreover, retail sales decelerated in the first two months of the quarter. That said, a silver lining came from the tourism sector, with arrivals from abroad beating pre-pandemic levels in the quarter. This, in turn, helped push down the unemployment rate to the joint-lowest level in over a decade in June, supporting consumer spending. In other news, Greece’s investment-grade rating was restored by Scope Ratings in August due to the recent decline in public debt. While Scope’s assessments aren’t currently recognized by the ECB, upgrades by other ratings agencies are possible this year.

Harmonized inflation rose to 3.5% in July, up from June’s 2.8%. Price pressures were stoked by higher services inflation, potentially linked to the recent surge in tourism. That said, the inflation figure was still the second lowest since the war in Ukraine began. Our panelists see inflation averaging slightly below the July level in H2 as a whole.