Greece: Revised data show economy plummeted in Q4
March 6, 2017
A complete dataset released on 6 March by the Hellenic Statistical Authority (EL.STAT) showed that the deterioration in Greece’s economy at the end of 2016 was much worse than previously estimated. GDP contracted a notable 1.4% over the same period of 2015, a significant downward revision from the flash estimate of 0.2% growth. The figure drastically contrasted Q3’s 2.2% expansion and marked the worst result since Q3 2015—when ‘Grexit’ fears and newly introduced capital controls curtailed economic activity.
The deterioration in economic conditions was driven by a slump in the domestic economy. Fixed investment nosedived 13.5%, the largest drop since Q2 2015, as a sour business environment continues to plague the country. Government spending contracted 2.0%, which was a starker fall than the 1.3% decrease in Q3. Public spending has contracted for four consecutive quarters as the government tries to return to a sustainable fiscal stance and fulfill creditor demands. Household spending slowed from a 6.8% increase in Q3 to a 1.2% expansion in Q4. Despite gains in the labor market, Greece’s unemployment rate remains notably above the Eurozone average and a total of eleven cuts to pensions are dampening household spending.
The downturn in the domestic economy caused a fall in imports, which decreased 2.2% (Q3: +14.1 year-on-year). Export growth moderated from 9.6% in Q3 to 3.9% in Q4, but still remained positive. A stabilization in oil prices have helped shore up exports of refined oil products and the country is benefiting from strong tourism earnings.
On a quarterly basis, the economy fell 1.2% in Q4 in seasonally-adjusted terms, which contrasted 0.6% growth in the third quarter. For the full year 2016, the revised data show that economy recorded zero growth, below the 0.3% increase previously estimated. The poor reading underscores the challenging state of the Greek economy and has increased doubt that the government will be able to hit tough bailout targets. A strong recovery has yet to materialize despite numerous reforms and bailouts, and the latest bailout review—which will unlock fresh funds for the government—has been stalled due to a standoff between the EU and the IMF.