Sur­prise growth of 0.8 pct in Q2

Greek econ­omy beat ex­pec­ta­tions be­fore start of cap­i­tal con­trols but an­a­lysts urge cau­tion with GDP fig­ures

Kathimerini English - - Front Page -

Greece’s sec­ond-quar­ter gross do­mes­tic prod­uct fig­ure posted a bet­ter-than-ex­pected in­crease of 0.8 per­cent over the pre­vi­ous quar­ter, a higher per­cent­age even than that of the UK, which re­ported 0.7 per­cent growth for the same pe­riod.

The un­ex­pected num­bers re­leased by ELSTAT, the coun­try’s sta­tis­ti­cal au­thor­ity, stunned mar­kets and de­fied pre­dic­tions of the ex­act op­po­site.

The fig­ures show a 1.4 per­cent in­crease in GDP in the three-month pe­riod from April through June this year com­pared to the same pe­riod last year. Nom­i­nal GDP fell 0.7 per­cent in the pe­riod through June. The cause of the un­ex­pected rise is be­lieved to be fear of cap­i­tal con­trols, which led to a spike in con­sumer spend­ing.

Greece’s econ­omy emerged from a six-year re­ces­sion in 2014 but shrank in the fi­nal quar­ter of last year.

Build­ing up to Greece’s ref­er­en­dum and just be­fore the cap­i­tal con­trols were in­tro­duced, Greek con­sumers went on a spend­ing spree to try to se­cure their sav­ings in bigticket items. This caused a tempo- rary peak in car sales as well as other lux­ury items and con­sumer goods in the month of June.

The pre-cap­i­tal con­trol spend­ing spree, a rise in ve­hi­cle reg­is­tra­tion and an in­crease in tourism com­bined to boost GDP growth. Cap­i­tal con­trols came into force on June 28, so the newly re­leased GDP fig­ures do not re­flect their im­pact.

Sev­eral voices have ad­vised tak­ing the un­ex­pect­edly good eco­nomic fig­ures with a pinch of salt. Speak­ing to Bloomberg, Daniele An­tonucci, an economist at Mor­gan Stan­ley in Lon­don, said: “The na­tional ac- counts pro­vide a wealth of in­for­ma­tion, but they’re not very timely, they’re mostly a look back. Growth mo­men­tum has turned in­creas­ingly neg­a­tive most re­cently.”

“Some eco­nomic ac­tiv­ity in­di­ca­tors in the sec­ond quar­ter, in­clud­ing con­sump­tion, in­dus­trial pro­duc­tion and tourism, had shown par­tic­u­lar re­silience,” said economist Nikos Mag­gi­nas at Na­tional Bank. “This ex­plains the sur­pris­ing sec­ond-quar­ter GDP read­ing.”

Ad­di­tion­ally, on the same day that the fig­ures were re­leased, Greece’s cred­i­tors warned against


1.1135 pre­ma­ture cel­e­bra­tions re­gard­ing the state of the coun­try’s econ­omy. An anal­y­sis by the Euro­pean Com­mis­sion, the Euro­pean Cen­tral Bank and the eu­ro­zone bailout fund an­tic­i­pates that Greece’s debt-to-GDP ra­tio will reach 201 per­cent in 2016.

The re­port fore­casts that the Greek econ­omy will con­tract by 2.3 per­cent in 2015 and a fur­ther 1.4 per­cent in 2016.

Euro­stat, the Euro­pean Union’s sta­tis­tics of­fice, is set to pub­lish sec­ond-quar­ter data for the eu­ro­zone to­day. The fig­ures are ex­pected to show 0.4 per­cent growth.

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