Clouds are gathering on the horizon regarding the sustainability of the economic growth the country achieved in the second quarter, amounting to 0.8 percent on an annual basis according to provisional figures released on Friday by the Hellenic Statistical Authority (ELSTAT). The expansion is based on uncertain private consumption and not on investments, which posted a sharp decline of more than 17 percent in the April-June period.
Growth may have doubled from the 0.4 percent rate registered in the first quarter, but analysts highlight that the 0.8 percent figure remains a long way from the forecasts of the government and the country’s creditors for a targeted 1.8 percent for 2017 as a whole. Hopes are mainly based on tourism, which is expected to boost the third quarter considerably.
ELSTAT said the quarter-on-quarter growth amounted to just 0.5 percent, while the total growth rate of the year’s first half amounted to 0.6 percent. This means that for the 1.8 percent target to be attained, the second half should see the economy expand by 3 percent.
The details of the data point to the source of concerns: Investments in Q2 posted an annual contraction of 17.1 percent, which is very worrying even if it is compared with a particularly robust second quarter of 2016 when investments had posted an annual expansion rate of 36.6 percent.
Furthermore, consumer spending showed a 1.2 percent rise in Q2, but this was more due to the increase in state expenditure than private consumption, which rose by just 0.7 percent. GDP remains heavily dependent on consumption, which is not only reliant on incomes but also on household savings.
On the positive side, a 9.5 percent increase in the value of exports was observed in the second quarter.
The government expressed satisfaction with the growth data, with the Prime Minister’s General Secretariat claiming that “the ELSTAT figures for the second quarter illustrate beyond any doubt that Greece has turned the page.”