Greece Economic Outlook
Our panelists see annual growth having slowed in Q1 on tighter financing conditions and a tough base effect. That said, they recently upgraded their forecasts; available data for Q1 points to stronger-than-expected activity. Industrial output rebounded in annual terms in the quarter, while inflation fell and the labor market tightened, suggesting robust domestic demand. In Q2, activity is likely healthy, as signaled by an upbeat PMI reading in April. In politics, on 21 May, the ruling right-wing New Democracy won the parliamentary elections but failed to secure a majority. On 22 May, incumbent Prime Minister Mitsotakis stated that he would not pursue a coalition. Second elections will be held on 25 June, and the winner will receive a 50-seat majority bonus. New Democracy is widely expected to obtain a majority and form the next government, boding well for economic stability.
Harmonized inflation declined for the seventh successive month in April, coming in at 4.5% (March: 5.4%). The deceleration was driven by softer price pressures for food and non-alcoholic beverages, housing and utilities and transportation. Inflation is seen decreasing further in the coming months due to lower commodity prices compared to 2022 and higher interest rates.