In­vest­ment drop stymies growth

An­nual eco­nomic ex­pan­sion tar­get likely to be met, thanks to tourism, ex­ports and pri­vate con­sump­tion

Kathimerini English - - Focus - BY EIRINI CHRYSOLORA

Greece’s nine-month gross do­mes­tic out­put data hov­ered around the an­nual tar­get for a 2.1 per­cent ex­pan­sion, but in­vest­ments re­main in neg­a­tive ter­ri­tory and the econ­omy has been saved by tourism, ex­ports and pri­vate con­sump­tion. Im­ports are also grow­ing, threat­en­ing the bal­ance of the cur­rent ac­counts.

Ac­cord­ing to the data is­sued yes­ter­day by the Hel­lenic Sta­tis­ti­cal Author­ity (ELSTAT), GDP in­creased by 2.2 per­cent yearon-year in the third quar­ter, tak­ing the av­er­age rate of the Jan­uary-Septem­ber pe­riod to just over 2.1 per­cent. For the an­nual tar­get to be met the econ­omy needs to ex­pand 2 per­cent in the cur­rent quar­ter.

Nev­er­the­less, in­vest­ments recorded a mas­sive 23.2 per­cent de­cline in the July-Septem­ber pe­riod com­pared to a year ear­lier, af­ter an an­nual de­cline of 8.8 per­cent in Q1 and 19.2 per­cent in Q2, ac­cord­ing to re­vised fig­ures, show­ing an ac­cel­er­a­tion in the drop.

The fi­nal draft of the 2019 bud­get, tabled on Novem­ber 21, fac­tors in a mar­ginal 0.8 per­cent in­crease in in­vest­ments for 2018 year-onyear, down from a rise of 11.1 per­cent in the midterm fis­cal plan, although the Jan­uary-Septem­ber data re­veal a dra­matic con­trac­tion. At the same time the ex­pen­di­ture of the Pub­lic In­vest­ments Pro­gram missed its tar­get by 1.3 bil­lion eu­ros, com­plet­ing the wors­en­ing in­vest­ment pic­ture.

Ex­ports of goods and ser­vices im­proved 7.6 per­cent in the third quar­ter from Q3 of 2017, but im­ports soared 15 per­cent. Fi­nal con­sump­tion fell 0.3 per­cent on a yearly ba­sis, due to the gov­ern­ment’s 4.1 per­cent cut. Pri­vate con­sump­tion in­creased 0.7 per­cent. Con­se­quently the re­duc­tions in pub­lic in­vest­ments, ex­pen­di­ture and con­sump­tion, which have gen­er­ated the pri­mary sur­plus over­run, con­tained the in­creased in growth, ELSTAT fig­ures re­veal.

For the whole of 2018 the Euro­pean Com­mis­sion and the In­ter­na­tional Mon­e­tary Fund ex­pect a growth rate of 2 per­cent, against a gov­ern­ment forecast for 2.1 per­cent.

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