Recession deepens

Bad start for 2013 as the recession reached 5.6% in the first quarter instead of 5.3% as estimated about a month ago by EL.STAT (Hellenic Statistical Authority).

This raises concerns about whether and how the Greek economy may soon return to growth. Greek government and the European Commission estimate that this year GDP will fall by 4.2%, to increase (+0.6%) next year. Instead, IMF predicts a 4.9% decline this year and further GDP decline of 1.4% in 2014.

Based on the provisional available figures for GDP growth, EL.STAT. revised its initial estimate for the worse as new adverse information emerged that was not available during the initial assessment, like monthly data for March imports and exports and quarterly for unemployment and turnover in the business sector.

According to EL.STAT. the main reasons for the decline in GDP at 5.6% is the further sharp decline in consumption and investment. The household consumption expenditure decreased by 8.7% and the total consumption expenditure (household and State) by 8.3%. Business investment fell by 11.4%.

In contrast, there is a decrease in trade deficit by 22.9%, which mitigated the decline in GDP. Exports declined by 2.6% (goods exports rose 4.9% and services decreased 12.4%), but this decline was offset by a 7.8% decrease in imports of goods and services (goods imports declined 5.3 % and services imports 17.8%).