Second-quarter growth slows

Greece’s economy expanded in the second quarter at the slowest pace since the country adopted the euro in 2001, as faster inflation and higher interest rates checked spending. Gross domestic product (GDP) growth slowed to an annual 3.4 percent in the three months through June from 3.6 percent in the first quarter, according to preliminary data released yesterday. On a quarterly basis, GDP increased 0.6 percent from the three months through March. Investments fell 2.8 percent in the second quarter from a year earlier, yesterday’s report showed. Consumption growth of 2.6 percent was close to the 2.5 percent annual pace notched in the first quarter, the slowest in at least seven years. «The growth rate for the country is at its lowest in a decade,» Nicholas Magginas, an economist at National Bank, told Reuters. «(But it) remains more than double that of the eurozone, reflecting the stronger pace of credit expansion… and the performance of tourism and shipping sectors.» In April, the government cut its forecast for full-year growth to 3.6 percent from 4 percent and raised its 2008 inflation projection to 3.5 percent from 2.9 percent, citing a weaker global economy and higher oil, energy and food prices. Still, second-quarter growth, which may be revised in a final statement on September 3, exceeded the 3.2 percent to 3.3 percent forecast by Economy Minister Giorgos Alogoskoufis last month. The European Commission has said eurozone GDP is likely to fall in the second quarter due to tighter credit conditions, slowing world growth, a strong euro and rising commodity prices. It forecasts growth of 1.7 percent in 2008, down from 2.6 percent in 2007. Italy’s GDP contracted 0.3 percent quarter-on-quarter and posted zero growth year-on-year, with analysts suggesting it could indicate a similar contraction for the 15-nation bloc. The German economy, the eurozone’s largest, probably shrank by between 0.75 percent and 1.5 percent in the second quarter, a German government source said last week. Greece had bucked the trend on strong revenues from shipping and tourism. Analysts said that this, coupled with continued inflows of EU funds, would partly offset decreased investment due to the global economic climate.