Greek economy clear of recession for first time in two years

15 Nov 16

The Greek economy has clawed its way out of recession for the first time in two years, registering two consecutive quarters of growth.

Greece Capital Shutterstock.jpg

Greece Capital

Lawmakers in Athens will be pleased that difficult austerity reforms seem to be bearing fruit. Photo: Shutterstock


New figures from the country’s national statistics agency, Elstat, show that Greece’s gross domestic product has risen 0.5% in the third quarter of this year, compared with the previous three months. GDP rose by 0.2% for the second quarter of 2016, compared with the first quarter.

The figures marked a 1.5% growth compared with the same period last year, and a larger rise than had been expected by analysts.

Overall, the government still expects a 0.3% contraction this year before a proper growth rebound in 2017. The International Monetary Fund forecasts the Greek economy will expand by 2.7% that year.

But even this year’s better-than-expected quarterly figures will be welcome news for Athens, where lawmakers have pushed through a raft of painful austerity measures in the past year to secure payments from Greece’s creditors under its third, €86bn bailout programme.

The country’s prime minister, Alexis Tsipras was forced to u-turn on his promises to resist creditors’ harsh demands in order to agree the bailout package and avert a potential ejection from the euro last summer. He is likely to be grateful for evidence that his decision is starting to bear fruit.

But Greece still faces a colossal debt pile worth €311bn, or 177% of GDP, that threatens to stifle growth in the long run.

Greece is counting on some form of debt relief from its creditors, who are currently only offering limited leeway.

Ahead of a two-day visit to the country last week, outgoing US president Barack Obama weighed into the dispute, calling for “meaningful debt relief” for Greece.

In an interview with Greek newspaper Kathimerini, he said: “I am a strong believer that to make reforms sustainable, people need hope.

“That is why I will continue to urge Greece’s creditors to take the steps needed to ensure the country is well-placed to return to economic growth, including by providing meaningful debt relief.

“Getting that done would not only fuel the Greek economic recovery, it would show that Europe can make its economy work for everyone.”

The IMF has also called for substantial debt relief for Greece, and has so far refused to participate in the country’s third bailout package because it doesn’t see the plan as credible without this element. 

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