Economy seen jumping in Q2

Greece’s gross domestic product has expanded by more than 10% in April and May according to the latest estimate by National Bank of Greece, while the latest informal projections by the Organization for Economic Cooperation and Development (OECD) point to the same prospect.

The estimates of the NBG Economic Analysis Department show 9.7% GDP growth in April year-on-year, followed this month by an 11% jump. At this rate the second quarter will likely register growth in excess of 10%.

As for the year’s first quarter, the updated figures show an annual GDP contraction of less than 7.5%, against the previous projection for a drop of 9.5% in March. On a quarterly basis the first quarter is expected to show a 1% expansion.

On that basis the NBG analysts believe the chances of 4.7% annual growth for the whole of 2021, according to its baseline scenario, are increasing. The government has forecast growth at 3.6% according to the Stability Program tabled in Brussels at end-April.

In its Weekly Tracker of GDP, the OECD makes an unofficial forecast for 8.1% growth in Q2, having reduced its estimate on the first quarter’s contraction to 0.6%. On a quarterly basis it showed a 1.2% expansion in January-March.

Investor consensus in the market points to a 9.2% contraction in Q1 year-on-year and a 7% rebound in Q2.

“The economic index data available to date for the April-May period are showing a strongly positive recovery of economic activity thanks to the lifting of most pandemic restrictions, pointing to a strong GDP rebound in the second quarter of 2021,” says the NBG analysis.

Of course the strong annual rebound in April and May reflects the low basis of comparison – i.e. the strict lockdown period of 2020. At the same time, the analysis shows that rebound is the outcome of the improvement of a large number of sector indexes.

The official estimates by the Hellenic Statistical Authority (ELSTAT) regarding first quarter growth will be issued on June 4.