The business sector’s sales recorded the first -pandemic decline in Q1:2024 (-1.6% YoY in deflated terms). However, the deep dive in data reveals that this negative performance essentially represents a correction against the high volatility of last year's monthly performance. This negative base effect, amounting to 5 percentage points, completely "hid" the positive underlying trend of business sector sales at the beginning of the year, estimated at +3% (in deflated terms).
This remarkable resilience of the business sector (amid an international environment of uncertainty) is confirmed by a series of conjunctural indicators, such as:
- the continuous rise of Greek business sector share within the EU economy (1.14% in terms of deflated value added, vs 1.08% two years ago), and
- the record-high employment growth, as net hirings during January-May 2024 (+315 thousand) reached their highest level since 2001.
Moving on to a sectoral level analysis, we discovered that most of the sectors recorded positive performances in the Q1. Specifically:
- Construction and IT sectors achieved strong growth, supported by the ongoing modernization and upgrade process of the business sector.
- Tourism and other services (primarily those supporting entrepreneurship, such as consulting) posted positive, albeit milder, growth rates (c. +5%).
- Trade and industry recorded a decline in activity, mainly due to the negative base effects, with the broad sectors maintaining positive underlying dynamics of c.1-2%. Exceptions to this performance include retail trade (due to the high inflation) and manufacturing sub-sectors prone to climate and supply chain disruptions (i.e. food and metals).
Focusing on the remainder of the year, April and May retain the sector’s positive underlying trend (+2.2% vs +3.0% in the Q1:2024), which is expected to be further strengthened over the second half of the year, in line with leading indicators.
In this context, we estimate that business sector sales will grow by approximately 3.5% (in deflated terms) in 2024, with the second half of the year reaching +6.5% (vs +0.9% in H1:2024). More specifically:
- Construction, IT, and other services will continue to benefit from the increased investments and the transformation of Greek entrepreneurship
- Export-oriented sectors (industry, tourism, and transport) have potential for significantly higher performance compared to 2023, by capitalizing on the improvement in the international economic climate. However, this export-oriented momentum – which represents c.½ of the total 2024 dynamic – is subject to the emerging political uncertainty in the US and Europe, as well as the potential occurrence of extreme weather events.
See the infographic:
