Economy grinds to a halt in Q1

GDP flatlines in Q1: The economy stagnated on seasonally adjusted quarter-on-quarter terms in Q1, contrasting the 0.8% expansion recorded in Q4 and marking the worst reading since Q2 2020. On an annual basis, GDP growth lost steam, cooling to 2.2% in Q1 compared to the previous period's 2.5% expansion and posting the worst result since Q2 2024.

A broad-based deterioration: Domestically, government spending shrank 1.1% in sequential terms in Q1 (Q4 2024: +1.1% s.a. qoq). Moreover, fixed investment contracted 6.1% in Q1, marking the worst result since Q3 2018 (Q4 2024: +3.7% s.a. qoq). That said, private consumption increased 1.3% in the first quarter, which contrasted the fourth quarter's 0.1% contraction, likely supported by the lowest unemployment rate since the 2008 financial crisis. On the external front, exports of goods and services fell 0.9% on a seasonally adjusted quarterly basis in the first quarter, which contrasted the fourth quarter's 0.3% expansion. Conversely, imports of goods and services rebounded, growing 0.7% in Q1 (Q4 2024: -1.7% s.a. qoq).

GDP growth to remain firm this year: Our Consensus is for the economy to regain some momentum in the coming quarters, bolstered by the ECB’s monetary policy easing, EU funds and looser fiscal policy. Over 2025 as a whole, GDP growth will remain upbeat by historical standards but will moderate slightly relative to 2025 as household consumption loses some steam. Global trade policies and conflict in the Middle East disrupting global maritime trade are key factors to track as Greece is one of the largest ship-owning nations in the world.

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