Q3 growth comes to just 2.8%
Against expectations, GDP shrank by 0.5% in the summer quarter compared to spring
Greek growth was just 2.8% year-on-year in the third quarter, according to Hellenic Statistical Authority (ELSTAT) data, much lower than analysts’ estimates, which had placed it in the region of 5%. Compared to the previous quarter, gross domestic product decreased by 0.5%.
It is therefore probably impossible that growth will achieve the budget estimate of 5.6% this year, while the forecast for the growth rate of 2023 is being revised downward. It is noted that the official entities had been equally or even more optimistic than the government in their recent forecasts: the European Commission 6%, the IMF 5.2% and the Bank of Greece 6.2%. The Bank of Greece now projects 2022 growth at 5%, not 6%.
A possible side effect of the slower growth in GDP is the limitation of the fiscal space, which was expected to increase due to the economy’s good course, allowing for some new benefits. To a lesser extent, the reduction of debt as a percentage of GDP is also negatively affected.
Even so, the GDP increase of 2.8% is higher than Eurostat’s provisional estimates of 2.1% growth in the eurozone and 2.4% in the European Union.
Tourism and shipping’s lower-than-expected performance, combined with a jump in imports, due to an increase in consumption, are some of the interpretations given by economists for this quarterly decline in GDP.
It is, however, also likely that this is largely due to a “technical” issue, namely the subtraction from GDP of subsidies given to support households and businesses (as they should, according to the rules), but without having added the revenues raised for this purpose from the Energy Transition Fund (as it should also be). This is because these revenues have not yet been recorded. Consequently, the government hopes that in the next GDP estimate, in three months’ time, the relevant correction will have been made. This is an amount of 3.4 billion euros, which was removed, according to a government source. In such a case, the 2022 growth rate will be revised upward.
