Economic growth slows to 3.1 pct

Investments, consumer spending weigh on GDP; further drop-off expected in last quarter

By Stelios Bouras - Kathimerini English Edition

Greece’s economic growth slowed to 3.1 percent in the third quarter due to a drop in investments and consumer spending, the National Statistics Service (NSS) said yesterday, with a further deceleration expected for the last three months of the year.

Gross domestic product (GDP) grew by an annual pace of 3.1 percent in the third quarter of the year, down from 3.6 percent in the May-to-June period.

Investment activity in the construction sector fell sharply with a 32.7 percent reduction in residential housing and an 18.3 percent retreat in the remaining building industry.

Growth in consumption spending, which accounts for about two-thirds of the economy, fell away as a result of slowing growth in retail sales, along with a hike in consumer inflation, the NSS added.

The slowdown is likely to continue in the fourth quarter of the year, according to economists, but Greece’s GDP is still outpacing the eurozone.

Economic growth in the 15-member eurozone shrank 0.2 percent in the three months ending in September.

Data from the Foundation for Economic and Industrial Research (IOBE) also showed yesterday that local economic sentiment sank to a record low in November, falling for the ninth consecutive month. IOBE said the economic climate index fell to 66.7 points from 72.9 in October.

The Finance Ministry sees Greece’s economy, estimated to be worth some 246 billion euros, moving ahead at an average annual pace of 3.2 percent this year before slowing down to 2.7 percent in 2009, slightly above European Commission estimates.

However, the impact of the global crisis may be harsher than first thought as global economic conditions worsen.

According to Finance Ministry sources, the Commission has also prepared pessimistic growth scenarios for Greece which foresee GDP dropping off to a 1.5 percent pace next year. sbouras@ekathimerini.com