Q1 GDP is better than expected

Greece’s economy showed resilience in the first three months of 2008, expanding by a better-than-expected 3.6 percent annual clip, but economists continue to forecast a slowdown for the year. Flash estimates by the National Statistics Service showed first-quarter gross domestic product grew faster than the 3.4 percent pace economists were expecting, in line with a rebound seen in the eurozone, mainly thanks to Germany’s performance. Gross domestic product in the 15 countries using the euro rose 0.7 percent in the January-March period against the previous quarter for a 2.2 percent year-on-year rise, the European Union statistics office estimated yesterday. The European Commission has said growth is likely to slow in the second quarter under the weight of tighter credit conditions, slowing world growth, a stronger euro and rising commodity prices and be 1.7 percent for 2008 against 2.6 in 2007. Quarter-on-quarter, Greece’s economy, about 2.5 percent of the broader eurozone, expanded at 1.1 percent, picking up from 0.7 percent in the previous three-month period. «Full-year Greek GDP growth is likely to decelerate to 3.5 percent from 4 percent in 2007. On the positive side, structural factors will help contain the impact of any sharper-than-expected slowdown in the world economy,» said economist Platon Monokroussos at EFG Eurobank. He said strong revenues from shipping and tourism and continued inflows of EU funds will provide some shelter for the economy from the headwinds it faces. Consumption growth almost halved to an annual 2.5 percent pace in the first quarter after growing 4.6 percent in the last quarter of 2007. Investments dropped 1 percent. Exports were up 0.9 percent while imports fell 4.6 percent. «The relative weakening of domestic demand – private consumption and investment – was offset by a positive net exports performance,» said economist Nicholas Magginas at National Bank. «For the full year growth is likely to slow to 3.3 percent.» Fearing that global economy woes will catch up with Greece, the government recently trimmed its growth estimate to 3.6 percent for 2008 from a previous 4 percent. The Bank of Greece is forecasting GDP growth of 3.5 percent for the year. (Reuters)