Greece’s economy grew 2.3 percent on an annual basis in the first quarter of the year, Hellenic Statistical Authority (ELSTAT) figures showed on Monday, mainly thanks to the growth in exports and business activity in general, unlike weakening consumption in the country, which continues to hamper growth. The growth rate compared to the last quarter of 2017 came to 0.8 percent.
Financial analysts estimate that the Q1 growth rate is compatible with the forecast for a total economic expansion of around 2 percent throughout the year.
ELSTAT’s provisional figures show a positive impact from the 7.6 percent rise in exports of goods and services and the 2.8 percent decline of imports on an annual basis. On the other hand, consumer expenditure contracted 0.3 percent year-on-year, while gross investments shrank by 10.4 percent.
Analysts point out that the worrying element is the continued reduction of private consumption, given that this accounts for no less than 69 percent of gross domestic product.
They attribute this fact to the prolonged austerity that does not allow for the positive effects of the improvement in economic activity and the increase in employment to trickle down to the entire economy. In other words, the high taxes and pension cuts are eating into the growth rate and not allowing the economy to take off.
The Business and Consumer Surveys of the Foundation for Economic and Industrial Research (IOBE) presented a similar picture: The economic sentiment index continued on its mild growth trajectory in May, climbing to 104.2 points from 103.6 in April, to reach the level last seen in February. IOBE attributes this development to the improvement in the indexes of business expectations in services and construction, while consumer confidence is sliding.
“On the side of households,” the IOBE report comments, “the stabilization of disposable incomes at low levels and the prospect of pressure on pension and taxation levels are predictably having a negative impact despite the gradual decline of the unemployment rate.”
As for the decline in investments, this is attributed to the major rise in ship imports last year that has not continued in 2018.