Greece’s GDP increased by a solid 2.3% y-o-y in FY:2024, outpacing the euro area average (0.8% y-o-y) for a 4th consecutive year. In Q4:2024, GDP growth accelerated to 2.6% y-o-y (0.9% q-o-q, s.a.) – the strongest annual pace since Q2:2023 – with all key expenditure components having positive contributions to y-o-y growth in this quarter.
• Gross fixed capital formation (GFCF) rebounded strongly by 9.0% y-o-y in Q4:2024, contributing 1.4 pps to y-o-y growth, on the back of revived construction activity and higher spending on machinery and ICT equipment.
• Construction, which underperformed in 9M:2024, has resurged strongly, with residential and non-residential activity up by 29.1% y-o-y and 11.8%, respectively, reflecting strong demand conditions in the real estate market, progress in large construction projects, and accelerating public investment; in fact, investment was equivalent to 16.7% of GDP, the highest level in 14-years. The increasing issuance of building permits, strengthened spending through PIB/RRF in 2025, and high capacity utilization and profitability in industry and services, portend double-digit GFCF growth in 2025.
• Private consumption growth slowed to 0.8% y-o-y (-0.3% q-o-q, s.a.) in Q4:2024, but remained a key driver of GDP growth in FY:2024, rising by an average annual pace of 1.9% and contributing 1.3 pps to annual GDP growth. The main drivers were strong labor market conditions, reflected in the average increase in labor compensation by 7.4% y-o-y in Q4 (4.7% in CPIdeflated terms), the continuing rapid fall in unemployment, and the solid rise in real wage and non-wage incomes.
• These drivers are expected to continue in 2025. In fact, a new increase in the minimum wage by c. 5.0% in 2025, combined with the projected slowing of inflation to below 2.3%, should support consumption. The increase in incomes in FY:2024 was strong enough to lead to a – positive for households – pick-up in their savings rate.
• The contribution of net exports in Q4:2024 GDP growth was positive (+0.2 pps), for the first time since Q4:2023, as total exports (in constant price terms) accelerated to 3.6% y-o-y in Q4:2024 (goods exports up by 1.6% y-o-y and services exports up by 5.9%, despite unfavorable external conditions), outpacing total import growth, which slowed to 2.4% y-o-y. Export growth is expected to pick up to 3.4% y-o-y in 2025, from 1.0% in 2024, on improving conditions in key export markets and solid tourism trends.
• Inventories (including statistical discrepancies) continued to play an important, though declining, role in GDP dynamics contributing 1.3 pps in GDP growth in Q4:2024 (-0.7 pps in s.a., q-o-q terms), following an extraordinary 3.7pp contribution in 9M:2024. As occurred in Q4, a significant part should be reclassified in revised data, mainly to fixed investment and, potentially, exports.
• Encouragingly, latest information from leading and conjunctural indicators available for Q1:2025, point to accelerating GDP growth to about 2.7% y-o-y, according to the NBG nowcasting model estimates.
• For the FY:2025, GDP growth will be buoyed by a significant 1.2 pps carryover effect, combined with more supportive fiscal and monetary policy stance, as well as lower oil prices, offsetting a negative impact on Greece’s economic growth from tariff-related uncertainty for the euro area.
• The above trends suggest FY:2025 growth of 2.5%, compared with a previous estimate of 2.3% (December 2024), despite uncertain external conditions. GDP growth picked up further to 2.6% y-o-y in Q4:2024 buoyed by higher investment, with strong carryover effects and supportive fiscal and monetary conditions raising FY:2025 growth to 2.5%
