Greece’s GDP increased by 2.4% y-o-y (+0.3% q-o-q s.a.) in constant price terms in Q3:2024 – in line with our September 2024 forecast based on NBG’s Economic Analysis nowcasting model. Solid private consumption, continuing accumulation of inventories and increasing exports were the main drivers, though data revisions and another quarter of large inventory accumulation (including statistical discrepancies) cloud the analysis.
Private consumption increased by a solid 2.1% y-o-y in Q3:2024, buoyed by substantial increases in the compensation of employees (up by 9.1% y-o-y in Q3) reflecting higher real wages, working hours, as well as employment. Labor market trends in 10M:2024 point to real disposable income growth above 3.5% y-o-y in 2024 following upon a solid 2.2% in 2023.
The improvement in the financial position of households is also reflected in accelerating consumer credit growth (6.1% y-o-y in September) combined with an upwardly revised saving rate and resilient household cash buffers.
The Q3 accounts were once again dominated by significant inventory buildup which contributed 1.9 pps to annual GDP growth in Q3:2024 (3.9 pps in 9M:2024 vs GDP growth of 2.3%). This is partly explained by expectations for strong demand, persistent frictions in global supply chains and the increasing contribution of inventory-intensive sectors in GVA growth – industry and retail trade. Moreover, some large non-residential construction projects and public works are usually classified as inventories during the construction phase and then are re-classified as gross fixed capital formation upon their completion in future revisions of national accounts. However as in the past, future revisions of the GDP accounts will likely reclassify such a large inventory accumulation.
Gross fixed capital formation was held back by base effects – related to upward revisions in GFCF data for 2022-23 – slowing to 0.3% y-o-y in Q3. However, the GFCF level in H1:2024 was 8.5% higher than initially estimated and the GFCF-to-GDP ratio increased to a 13-year high of 15.8% in 9M:2024.
Export growth picked up to 3.3% y-o-y (-1.9% in H1:2024), on the back of strong exports of services (+5.1% y-o-y in constant prices terms) and resilient goods exports (+1.2% y-o-y), despite the unfavorable external conditions. The limited contribution of tourism may reflect measurement issues and their classification in inventory levels and statistical discrepancies.
Encouragingly, latest available information from an albeit limited number of leading and conjunctural indicators, available for Q4:2024, presage q-o-q growth of about 0.4%, according to the NBG nowcasting model estimates.
Combining the model-based estimate with: i) the improving financial position of households and monetary policy easing, ii) slowing inflation (to 2.4% y-o-y in Q4), and iii) the backloading of Government expenditure of the ordinary Budget and the PIB (including RRF) which corresponds to a net fiscal impulse of c.1 pp in GDP growth in Q4:2024, raises our baseline forecast of GDP growth to 2.4% for Q4:2024, as well as for FY:2024. GDP growth is projected to continue near this pace in 2025 bolstered by fiscal and credit impulses (+0.4 and +0.3 pps in GDP growth, respectively).