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Greece: Economy picks up pace notably in the second quarter, surprising market analysts

August 28, 2015

In the second quarter of 2015, the economy expanded 1.7% over the same period of the previous year, according to more detailed data released by the Hellenic Statistical Authority (EL.STAT) on 28 August. Q2’s reading marked a significant acceleration from the meagre 0.2% increase tallied in Q1 2015 and came in above the flash estimate of a 1.5% expansion. Moreover, the second quarter’s strong reading is surprising, since throughout the quarter the government was locked in negotiation with its creditors for a third-bailout agreement and “Grexit” was a large looming risk. Q2’s surprisingly bright result came on the back of an improvement in the external sector and rising consumption. Private consumption expanded 2.8% in the second quarter, which was above the 1.0% rise record in Q1. Government consumption rebounded, recording the largest expansion since Q3 2009 in the second quarter (Q2: +2.4% year-on-year, Q1: -1.2% yoy). However, fixed investment fell sharply, swinging from a 25.5% expansion in Q1 to a 15.4% contraction in Q2.

Exports of goods and services fell 1.9% in the second quarter, which contrasted the 0.9% rise recorded in the first quarter. Imports contracted 3.9% in Q2, which was notably below Q1’s 10.6% expansion. As a result, the external sector’s net contribution to overall economic growth surged, rebounding from minus 3.1 percentage points in the first quarter to plus 0.7 percentage points in the fourth quarter.

The economy rose 0.9% in Q2 over the previous quarter in seasonally-adjusted terms, which was above the 0.1% expansion recorded in Q1 and the flash estimate of a 0.8% increase. In addition, the result surprised market analysts, who had expected the economy to contract 0.5%.

The government expects the economy to grow 2.9% in 2015. FocusEconomics Consensus Forecast panelists see the economy growing 0.4% in 2015, which is down 0.1 percentage points over last month’s forecast. For 2016, the panel expects growth of 2.2%.


Author: Angela Bouzanis, Senior Economist

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Greece GDP Q2 2015 0

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


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