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Greece Macro Flash: Economic growth returns strongly in April-May 2021

26/05/2021 - Reports

Greek Economy

Economic growth returns strongly in April-May 2021

  • The Greek economy remained resilient to Covid-19 in Q1:2021, despite the extension of several protective measures. However, Q1:2021 restrictions have been more targeted than the horizontal lockdown in Q2:2020.
  • Ιn Q1:2021 most of the high-frequency indicators continued to improve, pointing to a smaller-than-initially-feared drop in Q1 GDP of -7.4% y-o-y – from -7.9% y-o-y in Q4:2020 – and an expansion of 1.0% in s.a. q-o-q terms for a third consecutive quarter.
  • This improvement is also reflecting the resilience of conjunctural indicators data available for Q1:2021.
  • More importantly, the high frequency data for April-May show a significant positive response of economic activity. Specifically: i) net hiring flows of wage earners picked up to 82K in 4M:2021 compared with -27K in 4M:2020 (according to the Ergani Information System); ii) the Economic Sentiment Indicator increased to its highest level in the past 12-months; iii) passenger car registrations increased to 15K in April 2021, compared with 3K in April 2020 and 18K in April 2019; and iv) tax revenue rose by 5.8% y-o-y in April 2021.
  • Google mobility data rebounded sharply, following the easing of the restrictions. On a y-o-y basis, the average increase in mobility in April-May 2021 exceeded 30 pps compared to April-May 2020, presaging a double-digit rise in consumer spending in this period.
  • NBG’s monthly indicator of GDP, that combines information from forward-looking, conjunctural and mobility indicators with fiscal and financial data, increased significantly in April 2021, implying GDP growth of 0.6% m-o-m, s.a. and 9.7% y-o-y. 
  • Moreover, a subset of high frequency data on mobility and financial transactions, available for May 2021, point to a further strengthening in activity (GDP increase of 2.4% m-o-m, s.a. and 10.9% y-o-y in May), as the opening of the economy bolsters activity and confidence further.
  • Overall, NBG’s indicator points to a solid GDP expansion of 10.1% y-o-y (2.9% q-o-q, s.a.) in Q2:2021, which is expected to continue at a similar annual pace for the rest of the year. This scenario envisages an increase in tourism revenue of 80% y-o-y in FY:2021, to 55% below the 2019 outcome, based on encouraging signs from tour operators and travel bookings, as well as the loosening of travel restrictions from source countries.
  • Upwardly revised GDP estimates for Q1 and Q2:2021 point to upside risks to our baseline forecast for FY:2021 GDP growth of 4.7%.