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Greece’s economy contracts 0.1% in first quarter vs Q4

Greece’s economy shrank fractionally in the first quarter from the previous three months, as a drop in investment more than offset growing consumption, the country’s statistics service (ELSTAT) said on Wednesday.

Gross domestic product declined by 0.1% from a downwardly revised 1.1% growth in the fourth quarter of 2022, seasonally adjusted data showed.

On a year-on-year basis, the economy expanded by 2.1% in the first quarter, with growth slowing from a downwardly revised 4.8% in the final three months of 2022.

Household expenditure rose by 1.4% in the first quarter against the previous three months, with investment dropping by 1.0%.

Exports of goods and services, including tourism, rose by 5.7% in the January-March period.

“The decline mainly reflects the reversal of a positive impact from business inventories in the fourth quarter of 2022,” National Bank’s senior economist Nikos Magginas told Reuters.

Economic activity is seen picking up from the middle of the year on stronger tourism revenues, lower energy costs and faster disbursement of European recovery funds.

The Greek government expects growth to slow to 2.3% this year from 5.9% in 2022, but still outpacing the euro zone’s average, as elevated consumer prices and unwinding of government energy support weighs on consumer spending.

“The current trajectory is in line with the latest official forecasts with further upside risks from tourism, investment and a possible improvement of foreign demand, mainly from the euro area,” Magginas said.

Greece emerged in 2018 from a decade-long debt crisis that had forced it to sign up to three international bailouts. A robust economic performance is pivotal as it aims to regain an investment-grade rating later this year.
Source: Reuters (Reporting by Angeliki Koutantou; Editing by Bernadette Baum and Sriraj Kalluvila)

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