Increased chances of exceeding the growth target in 2018 “sees” the National Bank of Greece (NBG). As indicated, the course of the National Bank of Greece’s combined indicator of economic activity, taking into account the trend of the main components of GDP, suggests the possibility of an annual increase in the third quarter and an increased probability of exceeding the annual target for a growth of 2% over the whole of 2018, the bank notes in its analysis of the course of the economy.
As the study recalls, the Greek GDP grew by 1.8% per annum (+0.2% on a seasonally adjusted quarterly basis) in the second quarter of 2018, from 2.5% annually in the first quarter of 2018 (upward revised estimate), which represents a positive annual growth rate for the 6th consecutive quarter; the best performance of the past 11 years.
Exports remained the main pillar of the recovery, with an increase in exports of goods and services by 9.4% on an annual basis adding 3 percentage points to annual GDP growth in Q2. The above positive contribution was mitigated by the negative effect of the 4.3% increase in imports (mainly for raw materials, fuels and durable consumer goods), resulting in a net contribution of exports to GDP growth in the second quarter of 2018 to 1.5 percentage points.
With regard to the two main categories of exports, exports of services focusing on tourism added 1.7 percentage points to GDP growth, while goods exports added another 1.3, achieving a new record high, both in absolute terms and as a percentage of GDP (18.8% in the second quarter of 2018 vs. 11.2% on average) and a cumulative increase of 72.3% in the last decade.
Collective agreements increase consumption
The re-launching of the expantion of sectoral contracts – which began in a limited number of industries in the third quarter of 2018 – will contribute to a faster recovery of hourly wages, at least for employees who have not been covered by a sectoral contract to date, and might even have secondary effects on other sectors. Therefore, private consumption is expected to increase by 1.6%, on an annual basis, in the second half of the year, from 0.5% in the first half./IBNA