GREECE Macro Flash GDP Q4:2022

Greece’s GDP growth reached 6.1% y-o-y in FY:2022, strongly outpacing the euro area average (+3.5% y-o-y) for a second consecutive year. The strong annual growth outturn mainly reflects:
✓ an upward revision in Q3:2022 GDP growth to 4.4% y-o-y from 2.8% y-o-y, due to the significantly decreased drag from energy subsidies, compared with the initial Q3 estimates; a revision we had foreseen in our note of December 14, 2022.
✓ an acceleration in GDP growth to 5.2% y-o-y in Q4:2022 (+1.4% q-o-q s.a.), driven by buoyant domestic demand.
▪ Investment spending has accelerated further in Q4:2022 (14.8% y-o-y, 8.5% q-o-q, s.a.), with GFCF’s share in GDP increasing to 14.6% compared to a 10-year average of 11.4%.
▪ Private consumption increased by a solid 4.2% y-o-y, adding nearly 3.0 pps in Q4 GDP growth, on the back of supportive labor market conditions (employment compensation up by 5.6% y-o-y in FY:2022).
▪ Profits from entrepreneurial activity and non-labor income – reflected in the economy-wide gross operating surplus and mixed income – rose by 14.3% y-o-y in Q4 (15.1% y-o-y in FY:2022), the highest level since 2010.
▪ Inventories, which are estimated residually in the expenditure breakdown of GDP, had a massive 4.2 pps contribution in annual GDP growth in Q4:2022 from an upwardly revised 2.9 pps in Q3:2022, mainly due to the upward, energy-subsidy related, revision in the production-side GDP data.
▪ Net exports subtracted 4.8 pps from the annual GDP growth in Q4 and 2.8 pps in FY:2022, reflecting the combined effect of weak exports (-3.3% y-o-y in Q4 and +0.5% y-o-y in FY:2022 for goods, and -5.1% y-o-y and +9.9% y-o-y for services, respectively, in constant price terms) and resilient imports of goods and services (+10.9% y-o-y in FY:2022).
▪ This lackluster export performance reflects the application of very high deflators (+35% for goods and +17% for services exports, y-o-y, in Q4 and 36% and 24%, y-o-y, in FY:2022, respectively) to very strong nominal increases of the respective export categories. This bias appears to be related to the use of the Producer Price Index in industry for the non-domestic market as the price deflator, which we believe overestimates the deflator (especially for services) and, thus, underestimates the increase in export volume.
▪ NBG estimates that a downward adjustment of the export price deflator, closer to the magnitude implied by the respective trade statistics and relevant CPI components for services, would translate into a c. 1.5-pp boost in FY:2022 GDP growth, in constant price terms, to 7.5% y-o-y.
▪ The NBG forecast of GDP growth for 2023 is upwardly revised to 2.5%, in view of the strengthening of available high frequency indicators in the first months of 2023 vs their Q4:2022 average (economic sentiment, PMI, labor market, and fiscal data), in conjunction with a stronger-than-previously expected carryover effect from 2022 (estimated at +1.5% y-o-y for 2023).