Greece Macro Flash GDP Q1:2022

GDP growth in Q1:2022 exceeded expectations, reaching 7.0% y-o-y from 8.1% y-o-y in Q4:2021, compared with a euro area average of 5.1% y-o-y.
- Most notably, economic activity in Greece recorded a remarkable acceleration to 2.3% in s.a. q-o-q terms, from 0.8% q-o-q in Q4:2021, as the economy moved past a wave of Covid-19 infections and sustained the rising pressure from accelerating inflation and the eruption of the Ukraine crisis.
- Private consumption stands out as the key contributor to Q1:2022 growth, increasing by an impressive 11.6% y-o-y (+2.5% q-o-q), and providing a 7.9-pp boost to annual GDP growth, mainly on the back of a strong improvement in labor market conditions.
- Total compensation of employees increased by 7.4% y-o-y in Q1:2022 – the strongest pace in almost 14 years – on the back of rapid employment growth, with the unemployment rate falling to a 12-year low of 12.6% in Q1:2022 and employment exceeding its pre-pandemic level in Q1:2019 by 256K persons.
- Gross fixed capital formation increased at a strong double-digit pace for a 5th consecutive quarter (+12.7% y-o-y, +3.7% q-o-q, s.a.), rising to 13.3% of GDP and underlying the confidence that exists regarding the economy’s prospects.
- The resilience of business activity is also confirmed by the data on the income breakdown of GDP (available in current prices), showing that the gross operating surplus and mixed income – that corresponds to profits from incorporated and unincorporated business activity – increased in Q1:2022 by 15.3% y-o-y to a 10½-year high of €26 bn.
- The strength of domestic demand has outweighed the 3.1-pp drag from net exports, as the negative impact of the rapid import growth of 17.5% y-o-y (constant price terms) outpaced the healthy expansion of total exports of 9.6% y-o-y, with tourism playing a relatively limited role in this quarter.
- The stronger-than-expected Q1 GDP outcome, in conjunction with encouraging signs for Q2 activity by the NBG high-frequency indicator (estimated GDP increase of c. 5.0% y-o-y in Q2:2022) point to an increased probability that FY:2022 GDP growth will inch closer to 4.0% compared to our previous estimate of 3.0%, despite the exogenous headwinds from energy and food-induced inflation.