Greece’s GDP growth accelerated to 2.1% y-o-y in Q1:2024 from 1.3% in Q4:2023, regaining momentum after a subdued H2:2023, due to a temporary weakening in fixed capital investment and flood-related agricultural production losses.
Private consumption increased at a steady pace of 2.2% y-o-y in Q1:2024 (+0.2% q-o-q, s.a.), on the back of: i) supportive labor market conditions (total nominal compensation of employees was up by 5.6% y-o-y and by 2.5% y-o-y in CPI-deflated terms in Q1:2024), ii) rising non-labor income (rents, interest, and dividends), and iii) accelerating consumer credit (4.5% y-o-y in March 2024 from 3.4% in December 2023).
Fixed capital investment rebounded in Q1:2024 (+2.9% y-o-y and by 7.1% q-o-q, s.a., regaining traction following a 5.5% y-o-y fall in Q4:2023) on the back of higher spending on equipment and rising non-residential construction, with forward looking indicators pointing to a further strengthening in Q2:2024.
Net exports had a strongly negative contribution to economic growth of 3.6 pps in Q1:2024 (+0.5 pps in FY:2023). Goods exports were down by 8.8% y-o-y, reflecting: (i) weak euro area output growth, (ii) the response to the sharp price increases in some export categories, and (iii) agricultural output losses due to climatic factors. However, goods exports should rebound, in line with the euro economy, while services exports are on track for a new record year.
The continuing increase in goods imports (2.5% y-o-y, in constant price terms, in Q1:2024) is largely explained by higher spending on production inputs and capital goods supporting investment activity and GVA generation.
The contribution of total inventories to annual GDP growth increased to 4.4 pps, for the first time since Q2:2021 when the impulse from Covid19-related base effects had peaked.
The nowcasting model of NBG’s Economic Analysis Division, reflecting positive forward-looking indicators, points to a steady expansion in GDP by 0.7% in q-o-q, s.a. terms, and 1.6% y-o-y, in Q2:2024. The solid Q1:2024 growth outcome, in conjunction with model-based estimates for Q2:2024, lift the positive carryover effect on GDP growth for the rest of the year to 1.8%, boding well for a FY:2024 growth of 2.4%.