Greece’s GDP growth accelerated to 2.3% y-o-y in Q2:2024, with q-o-q s.a. growth at +1.1%, the strongest pace among euro area economies.
Private consumption increased at a steady annual pace of 2.0% y-o-y in Q2:2024 (+0.6% 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 3.0% y-o-y in CPI-deflated terms), ii) lower CPI inflation (2.6% y-o-y from 3.1% in Q1), iii) rising non-labor income (rents, interest, and dividends), and iv) accelerating consumer credit (+5.8% in July from 4.5% y-o-y in March 2024).
Gross fixed capital formation edged further upwards, rising by 3.9% y-o-y in Q2 from 3.1% y-o-y in Q1:2024, despite the negative contribution of total construction (-2.1% y-o-y). GFCF excluding construction rose by 7.6% y-o-y in constant price terms, with spending on machinery and transport equipment up by 12.2% y-o-y in Q2:2024.
The external sector experienced strong performance by both goods and services exports, while buoyant imports largely reflect expenditures on production inputs rather than consumer goods. Nonetheless, net exports had a strongly negative contribution to Q2 GDP growth of -3.4 pps, as the sharp increase in imports of production inputs outweighed the positive effect from the rebound in goods exports.
The sustained tourism momentum, which remains on track for a new record year, along with supportive base effects and higher goods exports, should limit the external imbalances in Q3:2024.
Strong demand and business activity encouraged further inventory build up, which added 3.8 pps to annual GDP growth in Q2:2024. However, the net contribution was limited if we account for the high import content of this GDP component.
Production-side data for Q2 showed that GVA generated by the industry sector contributed 1.6 pps in total GVA growth of 2.0% y-o-y, with the share of this sector in economy-wide GVA rising to an all-time high of 16.3%.
Latest information from the ESI sectoral business survey for July-August as well as VAT revenue, PIB and inbound-tourism arrivals trends point to a slight acceleration in GDP growth in Q3:2024 to c. 2.4% y-o-y, according to NBG’s Economic Analysis nowcasting model, with our baseline forecast for GDP growth in FY:2024 remaining unchanged at 2.4% y-o-y.