Crisis causes decline in growth

The growth rate of the Greek economy dropped to 3.1 percent in the third quarter of the year due to a decline in investment, lower consumption and stagnation of exports. But at least the recession that has hit the eurozone appears to have been avoided. The impacts of the global economic crisis are now evident also in the local economy, with growth at 3.6 percent in the second quarter of the year, while in Q3 last year gross domestic product (GDP) had expanded at a rate of 4.1 percent. The National Statistics Service (NSS) has changed the calculation method for quarterly GDP figures to bring it in line with European Union directives. It now calculates growth based on production, expenditure and revenues over a given period rather than just spending. The consequence of this change has been the downward revision of first-quarter growth from 3.5 percent to 3.2 percent, as well as the revision of most data announced since 2000. For 2008 as a whole, NSS estimates that the growth rate will fall to 3.2 percent from the 3.4 percent projected by the Economy and Finance Ministry in the draft budget for 2009. This means that in the last quarter of the year GDP will likely range between 2.8 and 3 percent. It is also possible that the ministry will revise its forecasts in the next few days. The crisis is evident across all sectors of the economy. In August there was a drop of 19.2 percent in the number of building permits issued. In September industrial production fell by 3.3 percent, registering a decline for the fifth month in succession. Retail commerce posted a 4.1 loss in terms of sales volume in August. The European Commission estimates that Greece’s growth rate will close at 3.2 percent this year and at 2.5 percent in 2009. At the same time, Eurostat announced that Greece’s inflation has contracted from 4.7 percent in September to just 4 percent in October, while in the eurozone it dropped from 3.6 percent to 3.2 percent in the same period.