Greek Economy May be Stabilizing

In Q1 of 2013, Greek economy shrank for a 19th consecutive quarter driven by drop in consumption and investment prompted by successive tax increases and spending cuts. Although the country is expected to remain in the recession this year, confidence is becoming stable in all business sectors.

In Q2 of 2013, the GDP contracted 4.6 percent yoy, the slowest fall since Q3 of 2011. In Q1 of 2013, consumer spending was slightly up from its the lowest level in more than a decade.

In May, the jobless rate increased further to a new high of 27.6 percent. In the same period, youth unemployment rose to 64.5 percent and is by far the highest in the Eurozone.

Retail sales have been declining since June of 2010 and fell 2.2 percent yoy in May of 2013. In July, consumer confidence fell to -70.9 from -66.5 in the previous month and -64.7 in July 2012.

Business confidence has been improving in the last few months. In May it spiked to 93.8, the highest level since September of 2008 and in July was at 91.7. In July, industrial production expanded 0.4 percent yoy.

In June, the trade deficit narrowed 10 percent yoy. Greek products have become more competitive due to a reduction in unit labor costs and weaker demand caused a reduction in imports.

In June, Greece became the first developed nation to be downgraded to emerging-market status by equity index provider MSCI. The agency cited low market accessibility as the main criteria. Since mid-2007, the Athens Stock Exchange General Index plunged over 80 percent.

Nuno Fontes |
8/12/2013 10:07:23 AM