Greece Macro Flash: Strong rebound in Q1:2021 GDP pushes FY:2021 NBG estimates to +5.7%

Booming investment led a strong rebound in Q1:2021 GDP, pushing FY:2021 estimates to +5.7%

  • The Greek economy showed higher-than-anticipated resilience to Covid-19 in Q1:2021.
  • GDP increased by 4.4% q-o-q, s.a. in Q1:2021 and declined by only 2.3% y-o-y, exceeding estimates based on high frequency indicators.
  • In quarterly terms, the GDP increase in Q1:2021 was one of the strongest among EU economies.
  • Encouragingly, gross fixed capital formation (GFCF) had the largest positive contribution to y-o-y GDP growth (+0.9 pps), increasing at the strongest pace in 3 years (+8.6% y-o-y).
  • The outlook for further investment improved, as gross business profits (approximated by the economy’s gross operating surplus and mixed income “GOSM”) increased by 3.0% y-o-y, whereas the credit impulse to the corporate sector is estimated at 3.5% of GDP in the 12-months to March 2021 (net cumulative credit expansion of €5.8 bn between April 2020 and March 2021). 
  • Non-oil goods export growth accelerated further (+11.3% y-o-y), reflecting their improving competitiveness, with the main products continuing to gain market share in the EU markets. Services exports were still down significantly (-38.7% y-o-y in Q1:2021), but by a lower extent than in the final quarter of 2020 (-44.5% y-o-y).
  • Government support remained significant, albeit less than previously, with the general government primary deficit at 2.3% of GDP in Q1:2021 (compared with a broadly balanced position in Q1:2020 and a deficit of 4.2% of GDP in Q4:2020) and primary expenditure up 26% y-o-y.
  • All in all, Q1 GDP data, in conjunction with the sharp improvement in the NBG’s monthly GDP indicator – pointing to a double-digit growth in April-May (see NBG May issue: “Greece Macro Flash – Economic growth returns strongly in April-May 2021”) – lead to an upward revision to our baseline scenario for 2021 GDP growth to 5.7% y-o-y.
Greece Macro Flash: Strong rebound in Q1:2021 GDP pushes FY:2021 NBG estimates to +5.7%