Greek economy roars back after pandemic, grows at annual 16.2% clip

Greece’s economy grew strongly in the second quarter, beating forecasts, with its annual expansion rate hitting double digits as consumer spending and investments picked up, data showed on Tuesday. 

Seasonally adjusted data showed gross domestic product (GDP) grew 3.4% from an upwardly revised 4.5% growth rate in the first quarter and at an annual 16.2% percent clip after a 2.3% contraction in the previous quarter. 

“The performance beat forecasts, we were expecting a 13.0% annual growth rate in the second quarter. This is due to a reawakening of consumer spending and strong investment activity,” said National Bank’s chief economist Nikos Magginas. 

The second quarter’s GDP performance did not get a major push from tourism, which is expected to be manifested in the third quarter, he said. Net exports were a small drag. 

“The bottom line is that if the trend continues the economy’s expansion rate will top 6.0% in the full year,” he said. 

Finance Minister Christos Staikouras said the GDP data showed the economy’s performance will be better than estimated in the country’s medium-term fiscal plan, which projects a 3.6% expansion rate this year. 

The lifting of lockdown measures, pent-up demand, a positive base effect and a fiscal boost from government support measures contributed to the second quarter’s GDP increase, Eurobank’s chief economist Tasos Anastasatos said. 

“Along with strong tourism performance in Q3, this could translate into a full-year result that exceeds earlier expectations and pave the way for closing the output gap due to the Covid-19 pandemic in 2022,” he said. 

The economy’s stronger-than-expected expansion may allow the government fiscal space to proceed with more tax relief measures. Prime Minister Kyriakos Mitsotakis is set to outline next year’s economic policy at the northern city of Thessaloniki on Saturday. [Reuters]