Growth in 2014 but concern for 2015

The Greek economy came out of a six-year recession in 2014, growing by an annual rate of 0.82 percent last year, according to provisional estimates by the Hellenic Statistical Authority (ELSTAT) published on Friday. Yet early signs of the course of the economy in the first quarter of this year are generating concern.

Gross domestic product in the last quarter of 2014 amounted to 46.7 billion euros, growing by 1.7 percent from the same quarter in 2013, but shrinking by 0.2 percent from the third quarter of 2014. Therefore, the only quarter last year with a GDP drop was the first (-0.4 percent), followed by three quarters of growth.

The Greek economy beat official forecasts for growth of 0.6 percent last year – with tourism playing a big part in the rebound – while in the last quarter all indexes had a positive impact on the economy.

Nevertheless, in the last few months there have been signs that the positive course of the economy may change, putting the target for 2.9 percent growth this year in doubt. A shortfall in tax revenues of 1.6 billion euros in December 2014 and January 2015 and the predictable slowdown of the state machine due to the elections on January 25 point to the problems the economy is facing in reaching the growth target.

Moreover, certain leading indicators are causing additional concern about the GDP in the first quarter of 2015: Industrial output shrank by 3.8 percent in December year-on-year, against a mean drop of 2.7 percent throughout 2014 and a 2.5 percent yearly growth in November; Industrial turnover declined 0.7 percent in November from the same month in 2013 against annual growth of 4.6 percent in October; retail commerce sales volume shrank by 1.5 percent in November from a year earlier while in October it had expanded 2.1 percent; and construction activity in terms of volume declined in November by 10.3 percent from November 2013, against a 6.7 percent decline in October.