Greece: Economy stagnates in Q3
GDP growth flatlined on a seasonally adjusted quarter-on-quarter basis in Q3, below the 1.1% expansion tallied in the second quarter. Q3’s reading marked the worst result since Q2 2020. On a seasonally adjusted year-on-year basis, economic growth moderated to 2.1% in Q3 from the previous quarter’s 2.6% expansion.
Domestic demand weakened in the quarter, dented by higher interest rates. Household spending contracted 0.7% in Q3, marking the worst result since Q4 2020 (Q2: +0.4% s.a. qoq). Government spending dropped at the sharpest pace since Q4 2020, contracting 1.2% (Q2: -0.3% s.a. qoq). Meanwhile, fixed investment decreased 1.8% in Q3, marking the worst reading since Q4 2020 (Q2: -0.3% s.a. qoq).
Looking at the external sector, exports of goods and services declined at a slower rate of 0.7% in Q3 (Q2: -1.7% s.a. qoq). In addition, growth in imports of goods and services picked up to 2.0% in Q3 (Q2: +1.0% s.a. qoq), marking the best reading since Q4 2022.
Both domestic and external demand detracted from growth, with only stockbuilding making a positive contribution to the reading, adding 3.7 percentage points.
Following Q3’s slump, our panelists see the economy expanding again in Q4 amid a stronger industrial sector. In 2024, growth is seen slowing relative to this year’s projected expansion, with both private and public consumption set to lose steam. On the flip side, fixed investment is set to remain strong, buoyed by EU funds. ECB monetary policy and the conflict in the Middle East are key factors to monitor.