The coast of Greece

Greece GDP Q4 2019

Greece: Growth slows to near three-year low in Q4 2019

The economic recovery lost further pace in the final quarter of last year, according to provisional data released by the Greek Statistical Institute (ELSTAT) on 6 March. GDP expanded a mere 1.0% year-on-year in seasonally-adjusted terms in Q4, slowing from the 2.3% increase recorded in Q3 and marking the softest expansion since Q1 2017. In quarter-on-quarter terms, output declined 0.7%, contrasting the 0.4% upturn in Q3 and marking the first quarterly drop in one-and-a-half years. For 2019 as a whole, GDP growth came in at 1.9%, matching 2018’s outturn.

A weaker external sector drove the fourth-quarter moderation. Exports of goods and services rose only 1.0% annually (Q3: +9.2% year-on-year) amid a pullback in merchandise exports due to frail EU demand and much slower revenue growth in the tourism industry. Imports, meanwhile, slipped for the second consecutive quarter (Q4: -0.3% yoy; Q3: -2.8% yoy).

On the domestic front, metrics improved noticeably compared to Q3. Capital spending soared 14.4% year-on-year (Q3: +2.7% yoy), while household consumption growth hit an over three-year high amid a sharp improvement in consumer confidence that was buoyed by the electoral victory of New Democracy. Lastly, public expenditure fell 1.4% year-on-year amid the new government’s drive for fiscal prudence (Q3: +0.1% yoy).

The gradual economic recovery is poised to continue this year on quickening domestic demand. The sustained improvement in the labor market should bolster private consumption, while strengthening confidence and tax breaks should stimulate capital spending. Softening Eurozone demand, competition from other tourist destinations in the Mediterranean and the coronavirus fallout cloud the outlook.

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