Greek economy grew by 2.8% in Q3

The growth of the Greek economy reached 2.8% in the third quarter of 2022, which constitutes a drop compared to the second quarter and despite the good level of tourism.

According to Hellenic Statistical Authority-ELSTAT, based on the available seasonally adjusted data, the Gross Domestic Product (GDP) in volume terms during the 3rd quarter of 2022 showed a decrease of 0.5%, compared to the 2nd quarter of 2022, while compared to the 3rd quarter 2021 showed an increase of 2.8%.

Review in hand

It is worth noting that in the 2nd quarter of 2022 the increase in GDP was calculated by ELSTAT at 7.7% and in the 1st quarter at 8%, but the figures were revised again at hand: at 7.1% and at 7, 9% respectively.

As reported by ELSTAT, GDP for the 3rd quarter of 2022 was negatively affected by the significantly increased level of subsidies on energy-related products, largely offsetting the increase in Gross Value Added. These subsidies are given to businesses and households, through the Energy Transition Fund.

Budget

Growth of 5.6% for this year and a drop to 1.8% in 2023 is predicted by the 2023 budget, which was submitted to Parliament.

According to the Commission’s forecasts, Greek growth will reach 6% this year to land at 1% in 2023.

Growth rates of major macroeconomic aggregates based on seasonally adjusted data in volume terms are as follows:

1. Quarter on quarter growth rates

o Total final consumption expenditure decreased by 0.6% in comparison with the 2nd quarter of 2022.
o Gross fixed capital formation (GFCF) increased by 0.1% in comparison with the 2nd quarter of 2022.
o Exports of goods and services decreased by 3.3% in comparison with the 2nd quarter of 2022. Exports of goods increased by 0.1% while exports of services decreased by 3.4%.
o Imports of goods and services decreased by 0.3% in comparison with the 2nd quarter of 2022. Imports of goods decreased by 1.1%, while imports of services increased by 2.5%.

2. Year on year growth rates

o Total final consumption expenditure recorded an increase of 3.6% in comparison with the 3rd quarter of 2021.
o Gross fixed capital formation (GFCF) increased by 7.7% in comparison with the 3rd quarter of 2021.
o Exports of goods and services increased by 0.9% in comparison with the 3rd quarter of 2021. Exports of goods decreased by 0.3%, and exports of services increased by 3.0%.
o Imports of goods and services increased by 5.2% in comparison with the 3rd quarter of 2021. Imports of goods increased by 8.6%, and imports of services decreased by 4.6%.

Rating agency forecasts

Moody’s estimates that growth will hit the brakes in 2023 to 1.8%, as explosive energy prices will push goods prices higher, reducing household purchasing power, while rising interest rates will put obstacles in the way of investments. In the medium term, they see growth rates close to 1.2%.

At the same time, DZ Bank also sees a recession in Greece in 2023, as do ING and Fitch. According to a relevant analysis, it significantly downgrades its estimate for the path of Greek GDP next year and, from 3.9% growth that was expected before, it now estimates that it will shrink by 0.7%, after “explosive” growth of the class of 6.9% this year.

It is worth recalling that Fitch recently became the first rating agency to now estimate that Greece will enter a recession in 2023, estimating a contraction of 0.2% of GDP, while ING’s assessment (for this year “sees” growth of 5.5%) one day earlier.

The Greek economy will slow down in 2023, as it is predicted to record zero growth next year, as both external and domestic demand will shrink, according to Capital Economics.

On the contrary, Greece will not go into recession, according to S&P. However, the agency expresses concern for 2023. S&P sees strong growth of 5.8% for Greece in 2022, which will however slow to 1.7% next year, as the energy crisis and its effects will overshadow the prospects. It notes that strong fiscal performance will lead to a significant reduction in the fiscal deficit this year to around 4% of GDP from 7.4% in 2021.

Also, S&P predicts that growth will not be 2.6% in 2023, as it estimated 6 months ago, but will “fall” to 1.8%.

Growth of the Greek economy of 6.7% this year and 1.6% in 2023 and 2024 is predicted by the OECD in its report on the prospects of the world economy that was published today.