Greece Macro Flash: GDP Q3:2017 & Macroeconomic Trends

Greece's recovery on track, boosted by business activity and tourism


Greece's recovery continues, with GDP increasing by 1.3% y-o-y in Q3:2017 (+0.3% on a seasonally-adjusted quarterly basis), for a third consecutive quarter of positive growth. It is the first time in 11 years that economic activity has increased three quarters in a row (on a s.a. q-o-q basis).

According to NBG analysis, Q3:2017 trends can be explained by strong business activity and an inventory replenishment by Greek businesses in view of the higher-than-initially-expected demand in the first semester and strong orders for H2:2017.  

Supporting the sustainability of business activity, corporate profitability – approximated by the gross operating surplus and mixed income – appears to be recovering strongly, as it posted its first 9-month period of positive growth since 2008 (1.3% y-o-y in 9M:2017). Moreover, investment in equipment – a critical measure of private sector business prospects – grew by a healthy 17.4% y-o-y in 9M:2017.

Exports of goods and services recorded a healthy expansion of 7.8% y-o-y in Q3:2017, receiving considerable support from strong tourism activity and accelerating GDP growth in the euro area.

In Q3:2017, the decline in fixed investment (-8.5% y-o-y) mainly reflects a sharp weakening in non-residential construction (-21% y-o-y), related to slow implementation of the public investment program (1.1% of GDP, annualized basis, lower in Q3:2017 than in Q3:2016). 

Strong import growth of 9.3% y-o-y in Q3:2017 – which subtracted 3 pps from GDP growth – has been almost exclusively driven by imports of production inputs and fuels and is the main counterpart to the large increase in inventories (contributing 2.2 pps to growth).

The current momentum in activity, along with positive confidence effects in Q4:2017, are estimated to bring GDP growth in FY:2017 close to the official forecast of 1.6% y-o-y, and create a positive carry of about 0.5 pps for GDP growth in FY:2018.

Greece Macro Flash: GDP Q3:2017 & Macroeconomic Trends