Q1 brought a 0.5 percent contraction

Greek economy has paid a heavy price for the delay in the completion of the second review of the country’s third bailout and this is reflected in the official data for first-quarter gross domestic product, which contracted 0.5 percent year-on-year according to the Hellenic Statistical Authority (ELSTAT). The figures released on Monday also showed a 0.1 percent contraction from the previous quarter and the impact has also been felt in terms of state revenues.

This came on the back of a 1.1 percent annual contraction in Q4 and explains why the government has resorted to slashing its forecast for the whole of 2017 to 1.8 percent in its midterm fiscal plan against a budget forecast for 2.7 percent.

This provisional figure for Q1, which confirms Greece’s return to recession after the Q3 2016 blip, generates concern even for the downwardly revised forecasts for this year.

April didn’t see a reversal of the economy’s southbound spiral: Investment in manufacturing posted a 3.5 percent contraction in March and April compared to the same period of 2016 according to a survey by the Foundation for Economic and Industrial Research (IOBE). Its economic sentiment index was at 94.9 points last month from 93.4 points in March, while the consumer confidence index only recorded a tiny uptick, from -74.4 points in March to -72.2 points in April. There is still 63 percent of households that say they struggle to make ends meet.

State budget revenues missed their target for the first four months of the year by 819 million euros, while expenditure in the same period lagged the target by 1.7 billion euros as the state has stopped paying its suppliers. This has led to a primary surplus of 1.73 billion euros.

“The Greek economy appears to be emerging from its recession at a much slower pace than anticipated, with its structural weaknesses hampering growth,” the monthly bulletin of the Hellenic Federation of Enterprises (SEV) noted on Monday.

The bulletin also pointed out that a series of indices did move up in the first quarter of the year, such as industrial output, retail sales and net hirings, and in any case the upcoming completion of the bailout review will pave the way for the recovery of the economy later this year.