GREECE Macro Flash GDP Q4:2023

Greece’s GDP increased by 2.0% y-o-y in FY:2023 outpacing the euro area average (+0.4% y-o-y) for a 3rd consecutive year.
• GDP growth eased to 1.2% y-o-y in Q4:2023, as the flood-related drag was larger than initially expected.
• GVA data on sectoral production, in constant price terms, showed an unprecedented fall in agricultural production by 17.6% y-o-y in Q4:2023 (-13.9% q-o-q, s.a), which subtracted 0.55 pps from GDP in Q4:2023 and 0.15 pps in Q3:2023. The combined drag on FY:2023 GDP from the destruction of agricultural output reached an estimated 0.35 pps.
• On a positive note, private consumption accelerated to 1.8% y-o-y in Q4:2023 (adding 1.3 pps to GDP growth) from 1.2% y-o-y in Q3:2023, supported by favorable labor market conditions and rising non-labor income.
• Net exports also had a positive contribution to economic growth (0.8 pps y-o-y in Q4 and 0.5 pps in FY:2023), with total exports – led by tourism – increasing by 2.1% y-o-y, in constant price terms, in Q4 (+2.8% in FY:2023) outpacing total imports. Total exports climbed to an all-time high of 38.4% of GDP, in constant price terms, in FY:2023.
• A drop in GFCF by 5.7% y-o-y in Q4:2023 – for the first time since Q2:2020 – subtracted 0.9 pps from Q4 GDP growth. It resulted mainly due to very negative base effects on residential construction as well as investment on machinery and ICT equipment, and a backloading of PIB spending. It is considered temporary.
• Indeed, deferred investment from 2023 (including reconstruction projects in Central Greece), the acceleration in RRF and FDI-related capital expenditure, and the expected easing of monetary policy from mid-2024, are going to support a double-digit GFCF growth in 2024 (10.2% y-o-y).
• Private consumption is also set to strengthen further in 2024 (growing by c. 2.0% y-o-y from 1.6% in 2023) on the back of higher real disposable income growth, comprising both rising employment and wages (including a new increase in the minimum wage in April 2024 and the first adjustment in public servants’ wages in 13 years applied in January 2024), as well as lower CPI inflation (estimated at 2.5%, or lower, in 2024 from 3.5% in 2023).
• Available information from a limited number of leading and conjunctural indicator releases for Q1:2024 (ESI and sectoral business components, manufacturing PMI, labor force survey and industrial production trends) bodes well for an acceleration in GDP growth to 1.8% y-o-y (0.7% s.a q-o-q, according to the latest estimate of the NBG economic analysis “nowcasting” model) and to c. 2.5% in FY:2024.