Greek economy shrinks in Q3 on higher imports, lower public spending

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People sit in a cafe in central Athens

ATHENS (Reuters) -Greece’s economy shrank in July-to-September compared with the second quarter, as declining net exports and public spending offset strong tourism, statistics service (ELSTAT) said on Wednesday.

Seasonally adjusted data showed gross domestic product dropped by 0.5% in the third quarter, from a downwardly revised 0.6% growth rate in the previous quarter.

“Greece’s GDP growth lost momentum in the third quarter, underperforming consensus expectations due to a sizeable drag from net exports and lowered government spending,” National Bank’s senior economist Nikos Magginas told Reuters.

Exports dropped by 3.3% in the third quarter compared with a 0.4% rise in the second quarter, with final government consumption also reduced by 0.6%.

The country’s growth slowed down to 2.8% year-on-year from a downwardly revised 7.1% growth in the second quarter.

Magginas said that he now expected an annual growth rate at around 5%, compared with his previous estimate of 6%.

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The government projects that the economy will grow by 5.6% this year thanks to higher-than-expected tourism receipts and strong consumer spending.

However, it estimates output will slow to 1.8% in 2023, as soaring energy costs and inflation are seen hurting domestic demand and exports.

Greece emerged in 2018 from a decade-long debt crisis that had forced it to sign up to three international bailouts. Its economic performance is pivotal as it aims to return to investment grade next year.

2022 2021

KEY FIGURES Q3 Q2 Q1 Q4

GDP (q/q, %) -0.5 0.6* 2.2* 0.6*

GDP (y/y, %) 2.8 7.1* 7.9* 8.8*

* revised

source: ELSTAT

(Reporting by Lefteris Papadimas and Angeliki Koutantou; Editing by Toby Chopra and Alex Richardson)

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