Strong growth continues in the year’s second quarter
The Greek economy continued to grow at the strong rate of 4.1 percent in the year’s second quarter, according to the National Statistics Service (NSS), vindicating estimates that at the end of the year, the growth rate will exceed budget forecasts and come to 4 percent. NSS data had shown a 4.6 percent growth in the January-March period and 4.2 percent in last year’s second quarter. Final consumption remains the main force behind the growth momentum of the Greek economy, as it expanded by 3 percent, compared with the same quarter last year. The share of investments was smaller, as their growth rate fell to 4.8 percent from 17.1 percent last year and 15.8 percent in this year’s first quarter. This slowdown in investment reflects the decline in construction activity, also recorded in recent months in the number of new building permits. In contrast, exports continued their excellent performance of the last three-and-a-half years, rising by 8.6 percent from 2.9 percent in Q2 last year and 9.8 percent in Q1 this year. After 12 months of double-digit growth, imports grew by just 4.6 percent. So even though the contribution of the economy’s external sector in growth continues to be negative, reflecting the permanent deficit in competitiveness, its negative effect on gross domestic product was less in the second quarter. In the light of this new data, the estimates about the growth rate reaching 4 percent by year-end are strengthening, against an official budget target of 3.7 percent, provided that the short-term effects from the recent forest fires will not be too great. For the Economy Ministry to calculate the impact of the fires on the whole of the economy, it assumes that 50 percent of agricultural production in the prefectures of Evia, Ileia, Arcadia, Laconia and Messinia has been devastated and that the infrastructures of the secondary and tertiary sector remain virtually unscathed. If these assumptions prove right when the recording of the actual damage is complete, the ministry believes that the growth rate will slow down by about 0.1-0.2 percent. It also stresses that this decline will be temporary, because in the medium-term the rate will accelerate as the reconstruction plan is implemented in the areas affected and investments and financial activity increase.
