Greece Macro Flash: GDP Q2:2018

A pick-up in private consumption supplements an ongoing export-driven recovery


GDP recorded a healthy expansion of +1.8% y-o-y (+0.2 q-o-q, s.a.) in Q2:2018 – a 6th consecutive quarter of positive growth – from an upwardly revised +2.5% y-o-y in Q1:2018.

Net exports were the main driver of economic activity in Q2:2018. They added 1.5 pps to GDP growth on an annual basis, reflecting a 3 pp boost from the increase in exports of goods and services by 7.2% y-o-y and 12.2% y-o-y, respectively, which outweighed a 1.5 pp drag from the increase in imports (mainly of productive inputs, fuels and consumer durables).

Services exports – buoyed by tourism – increased by 12.2% y-o-y, adding 1.7 pps to GDP growth in Q2:2018. The tourism contribution in GDP growth is expected to reach 1.4 pps in Q3:2018.

Goods exports remained on an upward trend for a 9th consecutive year, reaching a historical high of 18.8% of GDP in Q2:2018 from 18.5% in Q1:2018 and a 20-year average of 11.2% of GDP.

Consumer spending increased by 1.0% y-o-y, for the first time since Q2:2017, led by increased spending by medium-to-high income households, as indicated by strong sales of consumer durables and cars of 7.6% y-o-y and 28.1% y-o-y, respectively, in Q2:2018 and increased spending by domestic residents for tourism services (+12% y-o-y in Q2:2018, the strongest in 10 years).

The contraction in gross fixed capital formation exclusively reflects a further drop in spending on transportation equipment (i.e. mainly ships, vehicles and port machinery), with all other investment sub-categories recording positive growth (+4.9% y-o-y in Q2:2018).

Gross value added increased by 2.5% y-o-y in Q2:2018, expanding for a 6th consecutive quarter, and business profitability, reflected in the annual change in gross operating surplus and mixed income, grew at the strongest pace in 10 years (+2.7% y-o-y), setting the stage for an acceleration in investment spending.

NBG Economic Analysis' "high frequency indicator" of economic activity presages an acceleration in GDP growth to 2.2% y-o-y in Q3:2018, suggesting that the economic recovery in Greece remains on track to achieve average GDP growth of 2.0% y-o-y, or slightly higher, in FY:2018.

Greece Macro Flash: GDP Q2:2018