Economy shrinks 11.7% in Q3

Economy shrinks 11.7% in Q3

The blow to tourism this year from the effects of the Covid-19 pandemic has left a deep scar on the third-quarter’s economic activity, which posted a year-on-year contraction of 11.7%, according to the official estimates announced on Friday. On a quarterly basis, gross domestic product expanded by just 2.3% – i.e. a feeble rebound due to the increase in consumer spending after the second-quarter lockdown.

Throughout the first nine months of the year the picture has remained as previously described by the government, if not slightly better, following the upward revisions to the first two quarters by the Hellenic Statistical Authority (ELSTAT).

However, as Finance Minister Christos Staikouras stated on Friday, “due to the great uncertainty about the operation of the economy in December, the Finance Ministry will not alter its budget estimates for 2020 [i.e. for a 10.5% contraction], even though the provisional data suggest a lower annual contraction.”

Eurobank chief analyst Tassos Anastasatos estimates that “in the last quarter, GDP will decline on a quarterly basis due to the second lockdown, although the uncertainties remain huge. If the Q3 data are confirmed in the next review, a 5% quarterly shrinking in Q4 will indeed bring the year’s contraction to 10.5%.” He goes on to predict that the turbulence will continue in early 2021 before the economy embarks on a recovery course in next year’s second half.

The latest ELSTAT estimates speak of a 0.4% GDP expansion against a previous assessment for a 0.5% decline, while in Q2 the contraction stood at 14.2% and not 15.2%.

The third quarter’s performance was the worst among the 27 European Union member-states. The eurozone flash estimates for the third quarter showed a contraction of 4.4% from Q3 in 2019. On a quarterly basis, the July-September period showed a 12.6% rebound.

In Greece consumer spending increased in Q3 by 1.6% on an annual basis and by 14% from the second quarter, while exports fell 44.9% year-on-year due to tourism, and investments eased 0.3%.

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