Greek economy grows on quarterly basis but shrinks year-on-year

13 August 2016
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The Greek economy contracted by 0.7 percent year-on-year (y-o-y) in the second quarter of 2016, but expanded by 0.3 percent when measured on a quarterly (q-o-q) basis, flash estimates provided by the Hellenic Statistical Authority (ELSTAT) on Friday showed.

Greece’s gross domestic product rose 0.3 percent from the beginning of April to the end of June after shrinking by a revised 0.1 percent (from 0.5 percent) in the previous quarter.

This small increase defied many predictions that the recession, when measured on a quarter-on-quarter basis, would continue.

The median estimate in a Bloomberg survey was for Greek GDP to drop by 0.2 percent in the second quarter.

A Reuters poll pointed to a 0.1 percent q-o-q contraction.

The year-on-year fall of 0.7 percent was the fourth consecutive decline of its kind, underlining the fragile state of the Greek economy.

The revised y-o-y drop for the first quarter of the year was 0.8 percent, rather than the original 1.4 percent.

ELSTAT is expected to provide revisions of its flash estimates for Q2 on August 29.

The data for the second quarter of this year means that real GDP shrank by 0.7 percent in the first half of 2016, while nominal economic output remained unchanged.

The Bank of Greece has said it expects the economy to contract by 0.3 percent this year and to grow by 2.5 percent in 2017.

Last month, Standard and Poor’s ratings agency said it expects Greek GDP to fall 1 percent in 2016 and to grow 2 percent next year before hitting 3 percent in 2019.

The European Commission expects that the Greek economy will shrink by 0.3 percent this year before rebounding strongly next year with growth of 2.7 percent.

A robust growth rate in 2017 will be vital in helping the government meet its target of producing a primary surplus of 1.7 percent of GDP.

A failure to meet the fiscal target would mean Athens having to adopt further measures under the contingency mechanism that was adopted as part of the agreement to conclude the last bailout review earlier this summer.

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