ECONOMY

Greek economic growth gains pace, boosted by net exports

greek-economic-growth-gains-pace-boosted-by-net-exports

Greece's economy remained on the path of recovery in April-to-June, with its pace of expansion picking up from the first quarter thanks to a boost from net exports and government spending.

Gross domestic product expanded by 0.8 percent in the second quarter compared with a 0.2 percent growth rate in the first three months of the year, according to seasonally adjusted data released on Wednesday by the statistics service ELSTAT.

On an annual basis, economic growth accelerated to 1.9 percent from a downwardly revised 1.1 percent clip in the previous quarter.

“Second quarter GDP growth was broadly in line with market consensus and in line with projections for a growth rate of 2.0 percent or slightly higher for the year as a whole,” said National bank economist Nikos Magginas.

Data showed that exports of goods and services, up 3.3 percent compared to the first quarter, outpaced imports which fell 0.8 percent, producing a positive contribution to domestic economic output.

While government spending also boosted GDP in the second quarter, household spending shrank 0.7 percent on an annual basis and by 0.4 percent quarter-on-quarter.

Weaker consumer spending was likely due to households putting off planned expenditures until after the national election that took place in July.

“We will likely see a sharp rebound in consumer spending in the third quarter, given that consumer confidence hit a 19-year high in August,” Magginas said.

Greece's 180 billion euro economy grew 1.9 percent last year, driven mainly by net exports, with private consumption also providing a boost.

Greece emerged from a decade of bailouts in August last year and is now relying on financial markets to cover borrowing needs. The government fully lifted remaining capital controls earlier this month.

Its economy remains way below the size it reached before the crisis, when national economic output was around 242 billion euros.

The newly elected conservative government is keen on accelerating the country's economic recovery through promised tax relief and investment friendly policies.

In its spring forecasts, the EU Commission projected the economy would remain resilient and expand by an annual 2.2 percent this year. The country's central bank sees growth remaining at last year's pace, around 1.9 percent. [Reuters]