Commission: Greek economic recovery remains ‘heavily contingent’ on continued reforms

Greece’s economy is expected to continue growing at over 2 percent in the coming years but its recovery remains "heavily contingent on the continuing implementation of reforms," the European Commission said in its 2019 winter forecasts, published on Thursday. 

The economy grew at an estimated rate of 2.0 percent in 2018, it said.

Provisional data show that the country's real GDP grew by 1 percent (QoQ, in seasonally-and working-day adjusted terms) in the third quarter or 2018, corresponding to growth of 2.2 percent compared to the same quarter in the previous year and providing a 2.1 percent growth rate for the first three quarters of 2018.

"By taking advantage of spare capacity and benefitting from strong external demand, Greece managed to increase its market shares in global trade. Net exports thus became the main driver of growth in the first three quarters of the year, and (likely) for the whole year as well," the report said.

Another major driver of aggregate demand was the growth of private consumption, which was supported by employment growth, while activity in the real estate sector and hence investment in housing grew throughout the year.

Real GDP growth is forecast to reach 2.2 percent in 2019 and 2.3 percent in 2020. Consumer confidence had almost returned to pre-crisis heights by the end of 2018, thus private consumption is likely to remain a major contributor to growth in 2019.

However, investment remained subdued compared to 2017, at least in part due to a base effect from the revision of the annual national accounts, the Commission said.

Export growth is expected to moderate, as the tourism sector faces slowing demand growth and renewed competition from Turkey and goods exports are also set to weaken but should remain on an increasing trajectory despite the slowdown in the EU.