Investment drop stymies growth
Greece’s nine-month gross domestic output data hovered around the annual target for a 2.1 percent expansion, but investments remain in negative territory and the economy has been saved by tourism, exports and private consumption. Imports are also growing, threatening the balance of the current accounts.
According to the data issued on Tuesday by the Hellenic Statistical Authority (ELSTAT), GDP increased by 2.2 percent year-on-year in the third quarter, taking the average rate of the January-September period to just over 2.1 percent. For the annual target to be met the economy needs to expand 2 percent in the current quarter.
Nevertheless, investments recorded a massive 23.2 percent decline in the July-September period compared to a year earlier, after an annual decline of 8.8 percent in Q1 and 19.2 percent in Q2, according to revised figures, showing an acceleration in the drop.
The final draft of the 2019 budget, tabled on November 21, factors in a marginal 0.8 percent increase in investments for 2018 year-on-year, down from a rise of 11.1 percent in the midterm fiscal plan, although the January-September data reveal a dramatic contraction. At the same time the expenditure of the Public Investments Program missed its target by 1.3 billion euros, completing the worsening investment picture.
Exports of goods and services improved 7.6 percent in the third quarter from Q3 of 2017, but imports soared 15 percent. Final consumption fell 0.3 percent on a yearly basis, due to the government’s 4.1 percent cut. Private consumption increased 0.7 percent. Consequently the reductions in public investments, expenditure and consumption, which have generated the primary surplus overrun, contained the increased in growth, ELSTAT figures reveal.
For the whole of 2018 the European Commission and the International Monetary Fund expect a growth rate of 2 percent, against a government forecast for 2.1 percent.
