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Greece: Economy contracts in Q1

June 6, 2014

In the first quarter, the economy contracted 0.9% over the same period last year according to more detailed data released by the Hellenic Statistical Authority (EL.STAT) on 6 June. The contraction was an improvement over both the 1.1% decrease reported in the preliminary estimate and the 2.3% contraction recorded in the final quarter of last year. In addition, the figure overshot the 1.1% contraction the market had expected. Q1’s reading, which marked the softest contraction since Q3 2008, came on the back of an improvement in domestic demand while the external sector performed worse compared to the previous quarter.

On the domestic side of the economy, private consumption rebounded from a 0.2% fall in the fourth quarter to a 0.7% increase in the first quarter, which marked the fastest pace of growth since Q1 2010. In addition, government consumption rose 1.2% in Q1, which contrasted the 2.6% decrease observed in the previous quarter. Total investment fell 16.7% in Q1 (Q4: -15.7% year-on-year) with fixed investment decreasing 7.9% (Q4: -15.3% yoy)—the softest contraction in 16 quarters.

Exports of goods and services accelerated from a 0.5% increase in Q4 to a 5.4% rise in Q1, reaching the fastest growth pace since Q4 2010. In addition, imports swung from a 5.6% decrease in Q4 to a 2.2% increase in Q1. As a result, the external sector’s net contribution to overall economic growth fell from 1.8 percentage points in the fourth quarter to 0.6 percentage points in the first quarter, the lowest contribution since Q4 2009. EL.STAT has not provided seasonally-adjusted figures since Q1 2011 due to methodological issues.

The government expects the economy to expand 0.6% in 2014, which would mark the first expansion in 7 years. FocusEconomics Consensus Forecast panelists are less optimistic than the government and see the economy showing flat growth in 2014, which is up 0.1 percentage points over last month’s forecast. For 2015, the panel expects growth of 1.5%.


Author:, Senior Economist

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Greece GDP Q1 2014 1

Note: Year-on-year changes of GDP in %
Source: Hellenic Statistical Authority (EL.STAT) and FocusEconomics Consensus Forecast.


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