GDP data boost PM’s hand ahead of TIF
Buoyed by figures released on Friday, which showed that the Greek economy shrank by less than expected in the second quarter of the year, Prime Minister Antonis Samaras will on Saturday try to convince Greeks and members of his own New Democracy party to show more patience with the country’s fiscal adjustment rather than pushing for a confrontation with the troika.
Samaras is due to speak at 10.30 a.m. at the opening of the Thessaloniki International Fair and will use the opportunity to defend his government’s work but also to call for renewed faith in the painful consolidation process, which the government hopes will produce a primary surplus this year and the first signs of growth in 2014.
The prime minister’s task was made a little easier by the gross domestic product figures published on Friday by the Hellenic Statistical Authority (ELSTAT), which showed that the economy shrank by 3.8 percent in the second quarter of the year against a flash estimate of a 4.6 percent contraction.
Finance Ministry sources were “cautiously optimistic” about the Q2 figures and believe that this could help Greece beat the recession forecast for this year. The Greek economy, which has been in recession since 2008, was predicted by the troika to contract by 4.2 percent this year but the Finance Ministry believes this figure could end up somewhere between 3.8 and 4.2 percent.
The better-than-expected GDP came largely on the back of improved tourism receipts. The overall figure was also helped by the fact that country’s trade deficit shrank 75.7 percent in the second quarter from a year earlier as imports dropped 11.8 percent and exports rose 0.9 percent. Exports produced a turnover of 10.6 billion euros, while imports were worth 10.7 billion euros in Q2.
The Finance Ministry believes that the third quarter will also exceed expectations. However, Friday’s figures also showed that there is a long way before the economy is in full recovery mode. Gross fixed capital formation, for instance, dropped 11 percent from a year earlier in the second quarter.
Samaras is expected to balance his call for adherence to the adjustment program with pledges on welfare and a call for greater investment in Greece.