Greece’s economic contraction in the first quarter of the year was bigger than originally thought, as Hellenic Statistical Authority data released on Monday showed gross domestic product fell 1.4 percent year-on-year, against a previous estimate for 1.3 percent drop.
The January-March 2016 period was the third quarter of economic contraction in a row for Greece, following six consecutive quarters of growth. The Finance Ministry is anticipating a contraction in the second quarter too, before the economy starts recovering in the second half of the year and ends with a 0.7 percent drop in GDP for the year as a whole.
The slide in economic output is attributed to two main factors. The first is the 1.3 percent decrease in consumption, with state consumption shrinking 1.5 percent on an annual basis. Figures showed that consumption totaled 41.6 billion euros in the first quarter (down from 42.2 billion a year earlier). Private consumption dropped some 400 million and state consumption by 150 million euros.
The second factor was the 0.3 percent decline in investment. The drop in capital investment was sharper, at 2.7 percent. Notably, since the third quarter of 2014 – i.e. in the last seven quarters – it was only in two quarters that a drop in capital investment was recorded: in the third of 2015 and the first of 2016.
The negative impact on GDP from the drop in exports was offset by the 12.8 percent decline in total imports (9.2 percent in goods and 26.6 percent in services). Imports amounted to 13.5 billion euros in Q1 of 2016, down from 15.5 billion a year earlier. Therefore the country’s trade deficit dropped from 1.6 billion euros last year to 1.2 billion this year.
ELSTAT data showed that GDP in the January-March period came to 45.7 billion euros, compared to 46.5 billion euros in Q1 of 2015. It also posted a 0.5 percent quarterly decline from October-December 2015.
In the five quarters since SYRIZA and Independent Greeks came to power, to end-March 2016, GDP has shrunk 1.3 percent, private consumption has fallen 1.4 percent, investment has dropped 1.8 percent, exports decreased 12.3 percent and imports 12.7 percent.