Greece GDP Q2 2020


Greece: GDP records largest contraction on record in Q2

September 3, 2020

Economic activity plunged in the second quarter, with GDP contracting 15.2% year-on-year (Q1: -0.5% yoy), reflecting the impact of the Covid-19 pandemic and associated containment measures. Q2’s reading marked the worst drop on record and largely came in line with market analysts’ expectations.

The downturn was broad-based, with private consumption, public spending, fixed investment and exports all contracting. Household consumption dived 11.6% on an annual basis in Q2, marking the steepest decline since Q1 2011 (Q1: -0.7% yoy). Moreover, fixed investment collapsed 10.3% annually in Q2, marking the worst drop since Q4 2018 (Q1: -6.4% yoy). Meanwhile, public spending declined 3.2% (Q1: +1.4% yoy).

On the external front, exports of goods and services plummeted 32.1% in the second quarter (Q1: +2.4% yoy), marking the first contraction in four years and the worst reading on record. Travel restrictions, which lasted until the beginning of July, dealt a heavy blow to the tourism industry, the powerhouse of the Greek economy. In addition, imports of goods and services contracted at a more pronounced pace of 17.2% in Q2 (Q1: -1.1% yoy).

On a seasonally-adjusted quarter-on-quarter basis, GDP dropped 14.0% in Q2, down from Q1’s 0.7% decrease.

The economy is expected to fall into a deep recession this year as the pandemic and containment measures take their toll. Declining tourism revenues and the resurgence of Covid-19 cases, which prompted the government to reintroduce some restrictions in mid-August, are expected to further weigh on activity in Q3. Meanwhile, the country’s enormous amount of public debt and sour loans burdening the banking system cloud the outlook further.

FocusEconomics analysts see GDP contracting 8.3% in 2020, which is down 0.2 percentage points from last month’s forecast. In 2021, the panel sees growth at 5.7%.


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Greece GDP Chart

Greece GDP Q2  20 20

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

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