Economic growth cools in Q4

Outlook for first three months of the year is negative; crisis weighs on consumer and business expectations

Greek economic growth cooled in the final three months of 2008 to the slowest pace since the country adopted the euro in 2001 as investment declined for a fifth straight quarter.

Gross domestic product increased 2.4 percent in the fourth quarter from a year earlier, according to the National Statistics Service. The figure is lower than the 2.6 percent estimate made public earlier this month. Greece’s economic growth is slowing as the international financial crisis weighs on the economic climate, harming business and consumer expectations, according to Alpha Bank.

“These developments contribute to the considerable slowdown of consumption rates and the drop in demand for durable consumer goods despite the increase in wages,” the bank said yesterday in a weekly report.

The 27-nation European Union’s economy has slid into its worst recession in more than a decade.

Greece’s EU partners take in more than half of Greek exports and generate 60 percent of its tourism revenue, according to National Bank.

Exports fell 1.6 percent in the fourth quarter, while imports declined 5.2 percent, yesterday’s data showed.

GDP growth for all of 2008 was 2.9 percent, the slowest full-year expansion since 1996, according to central bank data.

The government expects Greece to be among a handful of countries in Europe to expand this year, forecasting a 1.1 percent growth rate. The European Commission, the EU’s executive branch in Brussels, projects the Greek economy will expand by 0.2 percent this year.

“Our outlook for the first quarter is quite negative. Consumption, which makes up more than 70 percent of Greek GDP, will be weighed down by a deteriorating labor market and tighter credit conditions,” Diego Iscaro, an economist from IHS Global Insight, told Reuters.

“We believe those factors will be more important than a fall in inflation, which of course should help.”