Greece: Still in search of a stable growth pattern – ING

According to Paolo Pizzoli, senior economist at ING, Greece’s volatile growth data over 1H19 suggested that the economy is still in search of a sounder growth pattern.

Key Quotes

“The unequivocally strong recovery in business and consumer confidence has yet to match hard domestic demand data, be that private consumption or gross fixed capital formation.”

“The passage of the baton of growth from exports to domestic demand proved to be short-lived, and the latest national account numbers confirm this.”

“As in 2Q19, the main driver was net exports, on the back of strong export performance and soft import growth. The latter likely followed poor fixed capital formation and soft private consumption growth. A puzzling pattern, given persisting global headwinds weighing on international trade flows.”

“With insufficient resources to rev up investment domestically, PM Mitsotakis seems to be eyeing foreign investors to kick start the process.”

“For the time being, the fiscal picture is following the post-programme expected path. Primary balance data released up to October suggests that Greece will again outdo the 3.5% of GDP post-programme target this year and the draft budget targets it at 3.7% for 2020.”

“Having paid a high economic and social price for the consequences of the debt crisis, the Greek economy continues recovering, even if is at an unspectacular speed. We expect it to outperform the eurozone aggregate over our current forecast horizon.”