Greek Q2 GDP growth revised down from flash estimate, mild contraction likely for full year

The Greek official statistics office, Hellenic Statistical Authority (EL.STAT.), yesterday published its revised quarterly GDP growth for the second quarter of the year. According to the data, the second quarter growth was revised down a bit seasonally adjusted to 0.2 percent in sequential terms, as compared with the initial estimate of 0.3 percent.

On a year-on-year terms, the GDP growth was revised down to -0.9 percent from -0.7 percent. This is the fourth straight quarter of negative year-on-year growth. On the whole, Greece’s real output fell 1 percent year-on-year in the first half of 2016 after contracting 1.2 percent in the second half of 2015 and positive growth of 0.6 percent in the first half of 2015.

Looking into the details, real private consumption growth continued to be in the negative territory for the fourth straight quarter, whereas real public consumption fell 0.7 percent in sequential terms. Meanwhile, net exports were a drag on the real GDP growth, whereas imports of goods and services rose 0.4 percent in sequential terms and dropped 7.1 percent in year-on-year terms.

Greece’s gross fixed investment rose 1 percent quarter-on-quarter and 7 percent year-on-year, possibly due to an increased spending on transport equipment, weapon systems and public construction, said Eurobank Research in a research note.

The second quarter GDP data has put up a rather sluggish scenario for domestic economic activity in that period. For the third quarter, not much data has been released so far; however, the current information indicates towards a mixed picture.

“Overall, we continue to expect a mild real GDP contraction to the tune of c. -0.5 percent for the full year, which would be equivalent to the (negative) statistical carry over from 2015”, added Eurobank Research.

The projection assumes, among other things, a further rebound in domestic economic confidence in the second half, the absence of a huge external shock, and rapid utilization of committed program financing for clearing public sector arrears, stated Eurobank Research.