A stronger than anticipated restoration of the Eurozone from the stagnation of the final quarters constitutes an upside danger for the course of Greek exports and GDP.
That’s, below this state of affairs, the expansion of exports and GDP could also be greater than forecasts, as Eurobank factors out in its weekly bulletin “7 Days Economic system”, which focuses on the forecasts of official organizations and the common market estimate for the course of the Greek economic system within the two years 2024-2025.
A faster-than-expected de-escalation of geopolitical tensions within the Center East poses a draw back danger to inflation. That’s, based mostly on this state of affairs, the rise in costs could also be milder than the forecasts.
Lastly, on this subject we additionally analyze the high-frequency indicators of the Greek economic system that have been revealed extra lately. By means of these indicators, nearly all of that are revealed earlier than the announcement of the quarterly GDP, it’s attainable to type a primary image of the efficiency of the economic system within the very brief time period (e.g. 1 / 4).
Precise zoom fee
The Greek economic system, after the deep recession within the first 12 months of the pandemic (2020), recovered strongly within the following two years. Intimately, actual GDP fell by 9.3% in 2020 after which elevated by 8.4% in 2021 and by 5.6% in 2022. In 2023 development slowed to 2.0% (0.4% within the Eurozone ), primarily because of the decompression of demand constructed up within the pandemic.
Nevertheless, the precise development fee in 2023 was decrease than anticipated. This result’s to some extent defined by the affect of the floods in Thessaly and by the decrease than estimated enhance in fastened funding (4.0% on an annual foundation).
Lastly, we must always observe that based mostly on the outcomes of the fourth quarter of 2023 – a rise in actual GDP by 0.2% and 1.2% on a quarterly and annual foundation respectively – the statistical base impact (carry-over impact) for the expansion in Greece in 2024 quantities to 0.3 share factors.
In technical phrases which means if the economic system stays stagnant all through 2024, i.e. if the GDP of the primary, second, third and fourth quarters of 2024 is the same as the GDP of the fourth quarter of 2023, then the expansion fee for the entire 12 months can be 0.3%. A attainable revision of the information might result in a revision of the bottom statistical impact.
Unemployment fee
Greece’s unemployment fee, a measure of the share of individuals within the labor drive who are usually not working however in search of work, reached 27.5% in 2013 (an all-time excessive in line with ELSTAT’s quarterly labor drive survey) from 7.8% in 2008 (historic low). Throughout the identical interval, actual GDP fell by 26.4%.
A fall in actual GDP means a lower within the manufacturing of products and companies and a lower in using the components of manufacturing (capital and labor given whole productiveness), a outcome that’s normally accompanied by a rise within the variety of unemployed.
The conduct of the unemployment fee within the phases of the financial cycle is countercyclical in route (when financial exercise decreases it will increase) and normally lagging in timing (when financial exercise decreases it will increase however with a delay).
Since 2014, the unemployment fee in Greece has been on a downward trajectory. Intimately, within the decade 2014-2023 the common annual change was -1.6 share factors, i.e. on common the unemployment fee decreased yearly by 1.6 share factors.
In 2023, it reached 11.1%, whereas an extra lower is estimated for the following 2 years. As proven in Determine 2, the vary of forecast values ranges from 9.4% (IMF) to 10.6% (FY24) for 2024 and from 8.7% (IMF) to 9.9% (FY24) for in 2025.
Even when essentially the most optimistic estimates are verified, the unemployment fee in Greece will nonetheless be at excessive ranges within the subsequent two years, reflecting the structural issues of the labor market (e.g. a chronic mismatch between labor demand from companies and labor provide by households).
We observe that when an economic system has a excessive unemployment fee it “wastes” assets as there are a number of accessible components of manufacturing that aren’t utilized within the manufacturing course of.
Inflation
In 2022 inflation in Greece based mostly on the Harmonized Index of Shopper Costs (HICP) was 9.3% from 0.6% and -1.3% in 2021 and 2022 respectively, a value that may be a historic excessive since ELSTAT has been constructing the index in query.
The causes of this enhance are based mostly, 1st, on the power disaster, 2nd, on the discharge of compressed demand because of the pandemic and third, on the issues brought on by the lockdowns within the world provide chain and worldwide commerce.
The energy of those components started to weaken in 2023, leading to a partial deceleration of inflation to 4.2%.
For 2024 and 2025 the slowdown within the development fee of the HICP in Greece is predicted to proceed, with the vary of forecast values starting from 2.4% (MEA) to three.0% (OECD) for 2024 and from 1 .8% (MEA) as much as 2.3% (OECD) for 2025 We observe that the common annual inflation in Greece within the 4 months Jan-Apr-24 was 3.2%, a price effectively above the goal of the European Central Financial institution (EKT).
Upside and draw back dangers of forecasts
No less than so far as the present 12 months and the projected development of actual GDP in Greece are involved, the dangers – upside and draw back – deal with the depth of worldwide geopolitical turmoil, the course of funding spending linked to the Restoration and Resilience Fund (personal and public), on the efficiency of the Eurozone economies and on the depth and frequency of opposed climate occasions, particularly in the course of the summer season and early autumn months.
For instance a state of affairs through which, 1st, worldwide geopolitical unrest in Ukraine and the Center East de-escalate sooner than anticipated, 2nd, enterprise and common authorities funding spending linked to the Restoration and Resilience Fund proceeds at a sooner tempo than anticipated (at the moment there are delays), third, the restoration of the Eurozone economic system is stronger than estimates and 4th, the depth of opposed climate phenomena is milder than anticipated, it might result in a development fee for 2024 greater than the forecasts of the official our bodies.
Quite the opposite, unfavorable developments within the aforementioned fields can result in a development fee for 2024 decrease than anticipated.
A primary “take a look at” for the event of the Greek economic system in 2024 would be the announcement by ELSTAT of the nationwide accounts of the primary quarter of 2024 on Friday, June 7, 2024. In keeping with the present common market estimate (Focus Economics journal subject June-24 ), the quarterly and annual actual development charges for Q1 2024 are estimated at 0.5% and 1.7% respectively. If worldwide situations develop easily, development within the Greek economic system might speed up within the second half of 2024 because of the base outcomes of the second half of 2023.
The high-frequency indicators that ship constructive alerts for the course of the Greek economic system within the first quarter of 2024 are these of employment (annual enhance of 1.6% from 1.2% within the fourth quarter of 2023), vacationer receipts (annual enhance of 28, 2%, though the impact of this dimension on the economic system as a complete within the first quarter is comparatively small, leading to whole companies exports displaying an annual enhance of 5.7%), motorized vehicle gross sales (annual enhance in quantity phrases by 22.3% and 10.2% in Jan-24 and Feb-24 respectively, but in addition a lower of 10.0% in Mar-24) and development exercise.
Quite the opposite, the high-frequency indicators that ship unfavorable alerts are these of the quantity of retail gross sales (down by 2.0% and 4.5% on a quarterly and annual foundation respectively), the quantity of gross sales in wholesale commerce (yearly down by 8, 2%, 1.2% and 17.4% in Jan-24, Feb-24 and Mar-24 respectively) and items exports (10.7% annual lower, 8.6% excluding gasoline and ships).
Supply: ot.gr
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