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Wednesday 28 September 2016

Greece in shock return to growth before banks' July shutdown

Published 14/08/2015 | 02:30

Greek Prime Minister Alexis Tsipras speaks during a meeting at the Greek Ministry of Infrastructure, Transport and Networks in Athens on August 12, 2015. Tsipras said on August 12 he was confident his debt-crippled nation would secure loan support from a third international bailout heading for parliamentary approval this week. AFP PHOTO / LOUISA GOULIAMAKILOUISA GOULIAMAKI/AFP/Getty Images
Greek Prime Minister Alexis Tsipras speaks during a meeting at the Greek Ministry of Infrastructure, Transport and Networks in Athens on August 12, 2015. Tsipras said on August 12 he was confident his debt-crippled nation would secure loan support from a third international bailout heading for parliamentary approval this week. AFP PHOTO / LOUISA GOULIAMAKILOUISA GOULIAMAKI/AFP/Getty Images

The Greek parliament may have been debating the country's third bailout deal yesterday in return for more austerity, but Prime Minister Alexis Tsipras received some small, welcome news on the economic front.

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Contrary to popular belief, the Greek economy had not actually tipped back into recession.

In fact, it unexpectedly returned to growth between April and June, rising 0.8pc, despite political turmoil and the threat of the country crashing out of the Eurozone.

Revised data also showed that Greece posted no growth or decline in the first quarter, despite the previously reported 0.2pc contraction.

This meant that the country avoided a return to recession at the start of the year, when Mr Tsipras's left-leaning Syriza Party swept to power and sent political ripples across Europe with the new goverment's pledges to end austerity and renegotiate the bailout.

However, this data is for the period before the Mediterranean country missed its payment to the International Monetary Fund, which sparked global fears of a Greek exit from the Euro amid several emergency meetings of Eurozone finance ministers in July, and crucially, led to the imposition of capital controls.

Nonetheless, analysts welcomed the data, with one describing the report as a pleasant surprise. The Greek statistics agency said GDP expanded by 0.8pc in the second quarter, but no official data was provided on what was behind the growth.

But experts pointed out that some sectors had proven quite resilient, such as the tourism sector, which had shown the ability to withstand the uncertainty stemming from the deadlocked talks between Athens and its creditors.

"Some economic activity indicators in the second quarter, including consumption, industrial production and tourism, had shown particular resilience," economist Nikos Magginas at National Bank told Reuters.

"This explains the surprising second quarter GDP reading."

He said the data helped shape a more favourable outlook for the year as a whole, rendering the prospect of an overall contraction of less than 2pc for 2015 "realistic".

There is a caveat, however. Yesterday's data is preliminary, and could be subject to revision.

Irish Independent

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