I ‘m going to take a quick look on the updated figures for Greek GDP 2013Q3:
Obviously the lower volume loss is quite significant although it remains a fact that nominal GDP is still contracting at -5.9% (Q2 and Q3) with the lower volume contraction attributed exclusively to deeper deflation (which is now at -2.9%). Nevertheless, Gross Value Added is now dropping at -3.1%, almost half the rate during 2012. Looking into the expenditure breakdown the most obvious observations are:
- Household consumption is still contracting significantly at -8.1%. The -6.6% change is attributed only to government consumption rising slightly at +0.1%.
- Gross fixed capital formation is still at around -10/12% with inventories being the driver of the positive growth in GCF during Q3.
- Exports of goods and services grew substantially (mainly exports of services) although imports also posted a positive sign, probably driven by the much larger tourist visits.
An alternative way to examine the GDP statistics is to calculate the relative contributions of each expenditure category:
What is quite evident from the table above is that any positive contributions are the result only of inventories and the external sector (usually imports). During 2013Q3 household consumption contribution increased to -60% with the other two positive contributions coming from inventories (29.5%) and services exports (mainly tourism, 16.20%) while imports have now turned negative. Contributions of fixed investment and consumption will need to improve significantly in order for a Greek recovery to be sustainable.
Another interesting exercise is to take a look at the GDP deflators by category (nominal – real growth rates):
Its is quite evident that especially during Q2/Q3, deflation accelerated significantly with rates close to -3%. Deflation is present in all expenditure categories while it seems that lower prices in exports are driven up to a point by corresponding import prices reductions. It is rather difficult to expect a turnover in the Greek recession without first observing a reversal of the deflationary forces in the major expenditure categories.
Overall, there are some marginally positive signs yet growth is the result of only a few categories (tourism and inventories) while the deepening deflation cannot easily be regarded as welcome news since it usually coincides with larger output gaps.