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.
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 – for the first time since Q2:2020 – 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.
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.
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 (according to the latest estimate of the NBG economic analysis “nowcasting” model) and to c. 2.5% in FY:2024.