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NBG high frequency estimate of GDP (Q3 & Q4:2020) | November 2020

12/11/2020 - Reports

Greek Economy

​Worsening epidemic conditions and new containment measures presage a contraction in Q4 GDP of 5.1% (q-o-q, s.a.), following the strong rebound in economic activity in Q3:2020 (7.7% q-o-q, s.a.) 


NBG's high frequency forecast of Greek GDP growth for Q3:2020 has been updated to include the most recent data for Q3 and early Q4:2020.

  • According to the latest estimates, the recovery in economic activity stalled in August on a seasonally adjusted basis and decreased by 0.8% in September (m-o-m, s.a.) – following increases of 6.5% and 8.8% in June and July, respectively. A preliminary estimate for October (based on a limited information set comprising, mainly, mobility and economic survey data) suggests that GDP contracted further by 1.7% (m-o-m, s.a).
  • Q3 GDP is estimated to have recorded a sizeable 7.7% expansion, on a s.a. quarterly basis (-8.9% y-o-y in Q3 from -15.2% y-o-y in Q2) against a preliminary estimate of +8.0% q-o-q, s.a. (-8.4% y-o-y), which was, mainly, based on forward-looking indicators. Activity was supported by the lifting of protective restrictions, a shift of spending from Q2, and the activation of about €12.0 bn of fiscal and liquidity support measures.
  • Subsequently, mobility data and other high frequency indicators showed a relatively high correlation with the worsened epidemic trends that led to a gradual reinstatement of targeted restrictions on specific regions and activities in October and to the enforcement of a nationwide lockdown in early-November. The enforcement of the nationwide lockdown is expected to weigh further on economic conditions, with consumer confidence already declining to a 2-year low of -45.5 in October.

Heading to a new drop in GDP in Q4:2020, which, however, should be milder than in Q2:2020, assuming an effective control of the pandemic in November

  • The activation of new containment measures, increased uncertainty and the deterioration in labor market conditions in previous months pose significant downside risks to GDP growth for the rest of the year.
  • The resulting headwinds will be partly offset by a new €3.8 bn stimulus package (including measures announced in late-October and early-November), which increases to €5.0 bn (3.1% of GDP), if the retroactive payment to pensioners is included.
  • Albeit November restrictions are broadly similar to those applied during the first lockdown – in late-March and April – the recessionary impact is expected to be ameliorated due to: i) higher preparedness of an increasing number of enterprises to use electronic sales channels, ii) increased awareness and familiarity of households and firms with the restrictions, fact that reduces potential disruptions in spending and enables planning, as indicated by an increase in retail sales in the days preceding the 2nd lockdown, as reported by market sources, iii) limited drag from tourism in this period compared to Q2 and Q3:2020, and iv) potential support in confidence from positive news on the Covid-19 vaccine front.
  • However, there are also some considerable downside risks, mainly, related to: i) the limited ability of the weakest economic entities (households and firms) to withstand a second round of lockdown, despite the fiscal support, ii) a part of extraordinary Covid-related spending in Q2 and Q3, especially on consumer durables, ICT and health equipment, and specialized services, is not recurring in Q4, iii) weaker external demand conditions, following a strengthening in the previous months, which led industrial confidence to a 6-month high in October due to higher export order-book levels.

For the rest of the year we assume that: (i) the epidemic curve flattens by early-December, permitting a partial lifting of restrictions on retail trade and "low risk" services, (ii) the estimated contraction in sectors where suspensions applied will be similar to that observed in April-May (especially in accommodation, food services and the oil-refining industry which jointly accounted for almost 60% of the drop in turnover in Q2), and (iii) the contraction is significantly milder in the rest of the economy (corresponding to c. 50% of the respective hit in Q2). If these assumptions hold, we expect GDP to decline by 5.1% (q-o-q, s.a.) in Q4 (-12.8% on a y-o-y basis), leading to an annual GDP contraction of 9.4% in 2020.


NBG Economic Analysis forecasts of Greek GDP growth based on high frequency indicators are updated on a regular basis and are available on the NBG website