Greece΄s recession probably eased somewhat in the third quarter of the year, but economists say any improvement could be short-lived as fresh austerity measures kick in and confidence hits record lows hurt by recent political uncertainty.
The country΄s statistical service is expected to release flash third quarter data on gross domestic product on Tuesday at around 1000 GMT.
The figures follow a 7.3% slump in the second quarter and an 8.1% dive in the first, which confirmed that the Greek economy remains mired in deep recession–now entering its fifth year–with no sign of an upturn in sight.
The third quarter figures should show a slight uptick, say economists, thanks to a relatively strong summer tourism season that may have helped boost economic activity relative to the months before.
“The tourism season went pretty well in the third quarter and this also helped boost resilience in retail sales,” said Nick Magginas, a senior economist at National Bank of Greece. “On top of this, export performance remained solid.”
But Magginas and other economists refrained from giving any forecasts for the July to September data, citing ongoing revisions to GDP data which affects year-on-year comparisons. Both the figures for the first and second quarter were based on non-seasonally adjusted figures–a break from traditional practice–while Greece΄s statistics agency reviews and revises its past methodology.
In October, the Hellenic Statistical Authority (ELSTAT) announced annual revisions to annual GDP data for the last few years as it adopted improved methodologies. On Tuesday, ELSTAT is also expected to release revisions to previous quarters.
The data comes after an 11-day political crisis in Greece that forced Prime Minister George Papandreou to step down, rocked financial markets across Europe, and raised doubts about the country΄s future in the euro zone.
Former European Central Bank governor Lucas Papademos will now lead the country΄s new interim government, in a move welcomed by the vast majority of Greeks. But days of wrangling between Greece΄s two main political parties–and the uncertainty surrounding the country΄s financial future–further shook business and consumer sentiment, which are already close to record lows.
Additionally, consumers and businesses are also beginning to feel the full brunt of the latest batch of austerity measures, many of which started to come into effect in September.
“The fourth quarter will be much worse. The economy is stagnating after the introduction of the latest measures,” said an economist at a Greek bank.
The first signs of recovery in the Greek economy are not expected until the fourth quarter of 2012, the European Commission said in a report last week, which forecast a 5.5% contraction rate for Greece in 2011.
(Source: Dow Jones)