Greece Macro Flash: GDP Q3:2019

Stronger-than-anticipated GDP growth in 9M:2019, buoyed by tourism and goods exports

Economic activity in 9M:2019 has grown faster than initially predicted – 2.3% y-o-y in Q3:2019 or 0.6% q-o-q, s.a. – following upwardly revised growth of 2.1% y-o-y in H1:2019.

The strong GDP performance in Q3:2019 reflects an increasing contribution from the tourism sector, which led to a rise in services exports of 14.5% y-o-y (adding 2.2 pps to annual GDP growth in this quarter) and by 10.8% y-o-y in 9M:2019, exceeding the initial moderate expectations.

Notably, in a period of weak economic performance in key export markets for Greece, goods exports increased by 6.2% y-o-y in Q3:2019 from 1.9% y-o-y in H1:2019, and their share in GDP climbed to a historical high of 19.3%, while total exports reached 36.4% of GDP.

Private consumption and gross fixed capital formation increased slightly by 0.2% and 2.0% y-o-y, respectively, in Q3:2019. This performance – although improved compared with Q2:2019 – remains substantially weaker than the trends of the forward-looking indicators in the same period, reflecting a lagged reaction by spending to the significant improvement in sentiment and the recovery in disposable income.

GDP growth is estimated to exceed 2.0% y-o-y in FY:2019, due to the upwardly-revised trends for 9M:2019 and an expected strengthening of domestic demand in Q4:2019, supported by the increasing impact of the fiscal expansion measures implemented in mid-2019.

Regarding 2020, annual GDP growth could reach 2.5%, bolstered, inter alia, by a positive carry from GDP growth trends in 2019, as well as from the additional fiscal stimulus provided by the Government Budget for 2020 – 50% of which reflects measures that support corporate activity and the real estate sector.