Economic sentiment may have recovered to an extent, with consumer confidence on the rise over the third quarter, but the drop in state consumption has kept the growth rate at a relatively low level.
Greek industrialists warn that the country needs a faster growth rate as the current pace of economic expansion is not sufficient for a proper recovery.
In its monthly financial bulletin, the Hellenic Federation of Enterprises (SEV) highlights the country’s slow growth rate after the end of the bailout program this summer, stressing that the business environment must improve and investments need to flow in for Greece to enter a robust growth cycle.
“The Greek economy is gradually recovering, mainly as a result of the momentum of exports and the strengthening of private consumption,” reads the bulletin, which follows the recent publication of the country’s gross domestic product expansion rate of 2.2 percent in the year’s third quarter.
Investment in fixed capital, which showed an annual drop of 23.2 percent, is seen as presenting a mixed picture in the July-September period; SEV points out that the massive decline is because of the particularly high comparison basis of the third quarter of 2017, when major construction projects were completed and at a time of great activity in ship imports.
On the other hand, investment in residential property, agricultural products, transport equipment and machinery was positive compared to 2017. SEV estimates that in the first nine months of the year, investments in fixed capital (excluding ship imports) expanded 2 percent, helping the growth of GDP.
The investment slide aside, there was also a 4.1 percent drop in state consumption in the third quarter, reflecting the government’s efforts to meet its fiscal targets. Most short-term indexes also point to steady but weak growth. This is seen in economic sentiment, exports, retail sales volume, construction activity and the slight drop in unemployment, among others, the SEV report noted. Still, manufacturing posted a decline while more debts to the state have been added, at a time when deposits shrank too.