Greece economy has expanded for the second consecutive quarter, and even more than the analyst estimates, which reinforces expectations for a strong recovery next year after a prolonged recession. The adjusted estimates show that the Greece economy expanded by 0.8% in the third quarter of 2016, while the gross domestic product (GDP) grew by 0.4%. The result is higher than the initial estimate of growth of 0.5% earlier this month.
The country is facing the second review of the rescue loan, which led to the unpopular reforms of the labor market. Athens is seeking to show that higher taxes and reducing pensions imposed as part of last year’s deal for financial assistance of 86 billion EUR will give result and will lead to economic recovery. The country needs to reduce the rate of unemployment, which is almost 24% and is the highest in the Eurozone, as well as to maintain the projected primary surplus of 2% without the cost of servicing the debt demanded by official creditors.
The seasonally adjusted data show that the economy has grown at an annual rate of 1.8% in the third quarter, faster than the estimate of 1.5%. The adjusted estimate is above market expectations, as the analysts had expected growth of 0.5% qoq and 1.4% yoy in the third quarter. The data confirm that the economy is rising from the bottom in the second quarter. The local demand strengthens in the second half and a positive result of 0.1% for the year now seems like a plausible scenario
The European Commission and the Greek central bank forecast that economy will contract by 0.3% this year. According to the EU, the economy will recover by 2.7% next year, while the Greek central bank believes that growth will be 2.5%. The latest forecasts by the Organization for Economic Cooperation and Development (OECD) show growth of 1.3% for next year.
Looking at the components of GDP, the growth in economic production is based on the stronger private consumption and the positive contribution of net exports. The consumption has grown by 2% compared to the second quarter, imports decreased by 10.2% and exports grew by 3.7%. The gross capital formation decreased by 30% compared to the previous quarter.
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