Saturday 16 December 2017

Stricken Greek economy expands for first time since 2015

Austerity-hit Greece sees slight turnaround in GDP
Austerity-hit Greece sees slight turnaround in GDP

George Georgiopoulos

Greece's economy grew modestly in the second quarter but weak demand and scant investment mean a strong rebound after years of recession remains elusive a year after the country nearly crashed out of the euro.

Data released yesterday showed the €176bn economy expanded by 0.2pc in April to June, slightly less than a previous estimate of 0.3pc due to weaker consumer spending and net exports. It was the first quarter-on-quarter expansion since late 2015 and followed a 0.2pc contraction in Q1.

Facing a second bailout review entailing an unpopular loosening of labour laws in the autumn, Athens is keen to show a fatigued electorate that painful taxation and pension cuts that came with last year's €86bn bailout deal will bear fruit and lead to recovery.

But kickstarting growth to bring down a jobless rate of nearly 24pc, the Eurozone's highest, is a challenge as a fiscal straitjacket to attain budget surpluses of 3.5pc of economic output weighs on activity.

Jaded by years of austerity, Greeks were unimpressed by yesterday's figures.

"The GDP turnaround in the second quarter doesn't mean a thing for us in retail trade, there is no liquidity in the market," said Antonis Papadakis (60), a clothing wholesaler who has seen his sales fall 70pc during the debt crisis years.

The data showed Greece's economy shrank 0.9pc on an annual basis in the second quarter, more than a flash estimate of -0.7pc, with economists expecting a mild recession for the year as a whole.

"We had a downward revision but it is encouraging that GDP recorded positive growth on a quarterly basis," said Eurobank economist Platon Monokroussos.

"Overall, a milder than initially expected contraction in the first half points to a full year GDP decline of close to 0.5pc or slightly better."

The European Commission and Greece's central bank project a 0.3pc economic contraction this year while the OECD sees a milder 0.2pc decline.

Rating agencies Moody's and S&P are more pessimistic, expecting the economy to shrink 0.7pc and 1pc respectively. (Reuters)

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business