Greece: Economic growth turns positive for the first time in over a year
May 13, 2011
In the first quarter, GDP expanded a seasonally adjusted 0.8% over the previous quarter, according to the first estimate released by the Hellenic Statistical Authority (EL.STAT) on 13 May. The result saw the economy bounce back from a 2.8% contraction recorded in the previous quarter. The reading marks the first expansion, following four consecutive quarters of contracting economic activity, and may suggests that the economy bottomed out in 2010. However, the economy turned out a positive quarter in the fourth quarter 2009, raising hopes that the country would emerge from recession, only to see those hopes dashed by four quarters of declining activity throughout 2010. Compared to the same quarter last year, the economy dropped 4.8%, following the 7.4% contraction recorded in the previous quarter (previously reported: -6.6% quarter-on-quarter). Revised and more complete data will be published on 9 June. Domestic demand is likely remain weak throughout this year as a consequence of the draconian austerity measures, which drag down public consumption. In addition, household spending should deteriorate amid rising unemployment. Therefore, the external sector will be the only growth engine. However, given its small size, its positive effects will be limited. Against this backdrop, the European Commission cut its GDP forecast for 2011 from a 3.0% contraction to a 3.5% decline, while maintaining its 2012 forecast of a 1.1% expansion in 2012.