Greece: Growth surges in Q3; Tspiras shakes cabinet
November 14, 2016
Greece’s crisis-hit economy returned to growth and recorded the best performance seen since Q1 2008 in the third quarter. According to an advance estimate released by the Hellenic Statistical Authority (EL.STAT) on 14 November, GDP rose 1.2% in Q3 compared to the same period last year. The expansion contrasted the 0.4% decline recorded in Q2 and suggests that the economy may finally be embarking on a recovery path after returning to recession in 2015.
On a quarterly basis, GDP expanded 0.5% in seasonally-adjusted terms, which followed the previous quarter’s 0.3% increase. The result overshot market analysts’ expectations and marked an end to the economy’s technical recession.
The flash GDP data did not include a breakdown by components, which will be released along with more complete GDP figures on 29 November, however the improved performance was likely due to both domestic and external factors. Booming tourism has boosted Greece’s economy this year and improved confidence, as the government broadly complies with creditor demands, is likely to have supported investment.
Despite the recent improvement in economic data, debt relief remains vital for the country’s long-run growth trajectory. In an effort to accelerate reform momentum and begin debt relief negotiations, Prime Minister Alexis Tsipras shuffled his cabinet in November. Tsipras replaced Energy Minister Panos Skourletis, who has opposed some privatizations, and appointed respected economist Dimitri Papadimitriou as economy minister. A new migration ministry was also established as the country seeks to deal with the influx of refugees and a number of other members changed positions within the government. Tsipras is hoping to push reforms before the Eurozone finance ministers meeting on 5 December to open up the door for debt relief negotiations.