The European Commission has revealed its intention to revise downward its estimate for the Greek growth rate, following the economic and political instability generated by continued delays in wrapping up bailout review negotiations.
Ahead of the publication of the spring economic forecasts for European Union member-states in May, the Commission’s spokeswoman for economic and monetary affairs, Annika Breidthardt, said on Wednesday that recent data point to smaller growth compared with the Commission’s latest forecasts in February, given the uncertainty that prevailed until recently around the completion of the review.
Breidthardt went on to add that “the fragile state of the economy highlights the need for the completion of the review at the earliest possible time.” According to its winter forecasts, Brussels expected Greek GDP to grow by 2.7 percent.
The reduction of GDP expectations comes as little surprise, however. A series of data from crucial aspects of the economy have since the start of the year illustrated that the economy will not grow as much as anticipated. After the drop in retail commerce in terms of sales volume, in supermarket sales, in construction activity, in exports excluding fuel (while the unemployment rate remains stubbornly unchanged at 23.5 percent) fresh figures on Wednesday confirmed the adverse consumer sentiment.
German research company GfK showed that the income expectations index of Greek consumers dropped in end-March to -52.3 points, its lowest level since October 2012. Compared to a year earlier, this is a decline of seven points, and compared to the last quarter of 2016, it shows a 12-point drop.
GfK also found a drop of seven points in the index measuring the intention for consumer purchases: Its reading in end-March was at -44.6 points, which entails a greater shrinking for the retail commerce to come. In total, the economic growth expectation index read -51 points in March, against -50.6 points a year earlier, though there had appeared to be a recovery trend (at -34 points) in end-December.