By George Georgiopoulos
ATHENS (Reuters) – Greece’s economy expanded for the second quarter in a row and by more than analysts expected in July-September, statistics service data showed on Tuesday, boding well for a stronger recovery next year after a protracted recession.
Revised estimates showed a 0.8 percent expansion rate in the third quarter compared to April-July, when gross domestic product grew 0.4 percent. It was a higher print than a 0.5 percent flash estimate released earlier this month.
Faced with a second bailout review entailing unpopular labour reforms, Athens is keen to show that higher taxes and pension cuts that came with last year’s 86 billion euro aid deal will bear fruit and lead to economic recovery.
Recovery will be key to bring down an unemployment rate of nearly 24 percent, the highest in the euro zone, and attain a projected primary budget surplus of 2 percent – excluding debt servicing outlays – demanded by Greece’s official creditors.
The seasonally adjusted data showed the 175 billion euro economy expanded at an annual 1.8 percent pace in the third quarter, faster than a previous 1.5 percent estimate.
The revised readings beat market expectations. Analysts polled by Reuters had forecast 0.5 percent quarter-on-quarter growth and a 1.4 percent annual expansion rate in the third quarter.
“The data confirm the economy bottomed out in the second quarter. Domestic demand is strengthening in the second half and a positive reading of 0.1 percent for the full year now appears a plausible scenario,” said Eurobank chief economist Platon Monokroussos.
The European Commission and Greece’s central bank had been projecting a 0.3 percent economic contraction for this year as a whole.
The EU sees the economy rebounding by 2.7 percent next year, while the Bank of Greece projects it will expand by 2.5 percent. The OECD in its latest forecasts sees 1.3 percent growth next year.
Looking at the components of gross domestic product, the increase in economic output was due to stronger private consumption and a positive contribution from net exports.
Consumption grew 2 percent compared to the second quarter, with imports declining by 10.2 percent and exports increasing by 3.7 percent. Gross capital formation fell 30 percent from the previous quarter.
(Additional reporting by Angeliki Koutantou; Editing by Catherine Evans)