Greece: GDP drop moderates but remains pronounced in Q4 2020 amid second lockdown
GDP contracted at a slower, albeit still pronounced, pace of 7.9% in the final quarter of last year (Q3 2020: -10.5% yoy), as the country’s second lockdown imposed in early November weighed on activity. All in all, GDP tumbled 8.0% in 2020, contrasting 2019’s 1.6% growth and logging the worst downturn since 2011.
Private consumption fell 4.7% in annual terms in Q4, worsening from Q3’s 1.6% contraction, as the closure of non-essential businesses for most of the quarter hindered household spending. Meanwhile, fixed investment rebounded, growing 1.6% in Q4 and contrasting the 1.1% decline tallied in the prior quarter. Moreover, government consumption picked up, expanding 7.3% in Q4 (Q3: +4.8% yoy).
On the external front, exports of goods and services slid 13.4% in the fourth quarter, softening significantly from Q3’s 41.9% nosedive. Conversely, imports of goods and services declined at a more pronounced pace of 9.5% in Q4 (Q3: -5.8% yoy).
Lastly, on a seasonally-adjusted quarter-on-quarter basis, economic growth moderated to 2.7% in Q4 from 3.1% in the previous quarter.
The economic scenario has likely remained frail in the first quarter of the new year, weighed on by the continuous extension of localized lockdowns throughout Q1. However, the recovery is seen picking up pace from Q2 as national and global vaccine efforts progress, enabling the lifting of local restrictions and kickstarting the all-important tourism industry. However, much hinges on the pace of vaccination and the course of the pandemic, with new Covid-19 variants and the possible extension of restrictions posing key downside risks.
Maddalena Martini, economist at Oxford Economics said:
“Given still-high infection rates and prolonged restrictions across the country, we expect GDP to fall by 1.8% q/q in Q1, before start recovering in Q2. We now see growth of 2.1% this year, down from 2.5% last month (partly due to base effects). A stronger rebound to 10% growth is now forecast for 2022. But risks remain tilted to the downside given the difficult health situation and the extended lockdown weighing on activity.”