Cyprus Mail

Greek economy grows 0.8 pct in third quarter, beats forecasts

Greece‘s economy expanded for the second quarter in a row and by more than analysts expected in July-September, statistics service data showed on Tuesday, boding well for a stronger recovery next year after a protracted recession.

Revised estimates showed a 0.8 per cent expansion rate in the third quarter compared to April-July, when gross domestic product grew 0.4 per cent. It was a higher print than a 0.5 per cent flash estimate released earlier this month.

Faced with a second bailout review entailing unpopular labour reforms, Athens is keen to show that higher taxes and pension cuts that came with last year’s €86bn aid deal will bear fruit and lead to economic recovery.

Recovery will be key to bring down an unemployment rate of nearly 24 per cent, the highest in the eurozone, and attain a projected primary budget surplus of 2 per cent – excluding debt servicing outlays – demanded by Greece‘s official creditors.

The seasonally adjusted data showed the €175bn economy expanded at an annual 1.8 per cent pace in the third quarter, faster than a previous 1.5 per cent estimate.

The revised readings beat market expectations. Analysts polled by Reuters had forecast 0.5 per cent quarter-on-quarter growth and a 1.4 per cent annual expansion rate in the third quarter.

“The data confirm the economy bottomed out in the second quarter. Domestic demand is strengthening in the second half and a positive reading of 0.1 per cent for the full year now appears a plausible scenario,” said Eurobank chief economist Platon Monokroussos.

The European Commission and Greece‘s central bank had been projecting a 0.3 per cent economic contraction for this year as a whole.

The EU sees the economy rebounding by 2.7 per cent next year, while the Bank of Greece projects it will expand by 2.5 per cent. The OECD in its latest forecasts sees 1.3 per cent growth next year.

Looking at the components of gross domestic product, the increase in economic output was due to stronger private consumption and a positive contribution from net exports.

Consumption grew 2 per cent compared to the second quarter, with imports declining by 10.2 per cent and exports increasing by 3.7 per cent. Gross capital formation fell 30 per cent from the previous quarter.

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