The Greek economy has been in decline since the first quarter of 2020, resulting in the disposable income of households shrinking and a fall in consumption. According to ELSTAT, during the first quarter, the disposable income of Greeks decreased to 27.89 billion euro, while consumption was reduced to 29.9 billion euro. What’s more, the reduction of investments in turn foreshadows accordingly if not more pronounced phenomena of income reduction and therefore of consumption in the near future.
More specifically, the disposable income of households across the country in the first quarter of this year fell from 28 billion euro to 27.89 billion euro, compared to the first quarter of 2019. Thus, as a result, the final consumer expenditure of Greek households decreased by 0.5%, as from 30.1 billion euro it fell to 29.9 billion euro. However, the household savings rate, defined as gross savings to gross disposable income, was -7.28% in the first quarter of 2020 compared to -7.34% in the first quarter of 2019.
Investments are falling
From the same data of ELSTAT for the quarterly non-financial accounts of institutional sectors, the following data also emerge:
With regard to private investments, (gross fixed capital formation) in the non-financial corporations sector, it was limited to 2.4 billion euro. The share of investments in the sector, which is defined as the gross fixed capital investments to the gross value added, was 17.5% from 20.4% in the first quarter of 2019.
The General Government sector showed a net borrowing of 2.6 billion euro, compared to 1.7 billion euro in the first quarter of 2019.
In the first quarter of this year, a deficit in the external balance of goods and services was recorded at 3.6 billion euro, compared to a deficit of 4.11 billion euro recorded in the first quarter of 2019 (in particular, imports of goods and services decreased by 0,75 billion euro, while exports of goods and services decreased by 0.24 billion euro). In addition, according to ELSTAT data, the first quarter of 2020 recorded a deficit in the external balance of primary income, current and capital transfers of 0.23 billion euro, compared to a deficit of 0.58 billion euro recorded in the corresponding quarter last year. As a result, the overall economy showed net borrowing of 3.83 billion euro, from 4.69 billion euro in the first quarter of 2019./ibna