The Greek economy’s contraction rate eased significantly in the third quarter of the year to 3 percent, while deflation reached an unprecedented level of 2.9 percent in November, according to data released on Monday by the Hellenic Statistical Authority (ELSTAT).
The reduction in the contraction of the country’s gross domestic product is attributed to the reversal in the course of state consumption (spending by state entities), the strengthening of exports and a containment of the drop in investments. In absolute figures, the Q3 GDP amounted to 43.5 billion euros, returning to the level of the same quarter in 2001 (43.3 billion).
ELSTAT figures showed that the recession was contained following the course set from the second quarter, with financial activity strengthened by the very good tourism season. In the first nine months of the year the economic contraction amounted to 4.06 percent on a yearly basis, and for this reason the Finance Ministry is expecting the economy to be no more than 3.8 percent smaller at the end of the year than at end-2012, against a 6.4 percent contraction recorded last year. Officially, however, the target for a 4 percent economic contraction remains.
Compared with Q3 2012, private consumption shrank by 8.1 percent, as the disposable incomes remain under huge pressure. Public consumption ended its five-quarter decline to edge up 0.1 percent year-on-year. Investment declined by 12.6 percent but exports expanded by 5.7 percent. Imports also rose, by 2.3 percent.
The 2.9 percent decline in the Consumer Price Index last month is the biggest negative move since records began in 1959. This was the ninth consecutive month of contraction for the CPI. This considerable drop is due to prices in the service sector as well as apparel products, which had a sales window to benefit from on November 1-9 this year for the first time. Still, prices for basic food categories such as dairy products, eggs and potatoes continued to grow, a factor which is forcing the Development Ministry’s hand to act on the recommendations by the Organization for Economic Cooperation and Development (OECD) regarding market operation.