Greece's economy is catching up fast. According to figures published on Monday by the Hellenic Statistical Authority, its gross domestic product (GDP) in the first quarter of 2018 increased by 0.8 percent. This is compared to the fourth quarter of 2017, when growth reached 0.2 percent. The Greek economy has clearly gained momentum, with its progress being twice as high as the average for countries in the Eurozone. In contrast to the first quarter of 2017, GDP growth was 2.3 percent.
That's good news for Greek Prime Minister Alexis Tsipras. The latest growth figures fit into his plan of a clean bailout exit in August, when aid payments to Greece expire. The country has been flooded with international loans for more than eight years, and is expected to independently refinance itself on the capital market.
The Greek economy has now grown for the fifth quarter in a row, wiggling out of the recession that began in the fall of 2008. For the Greeks themselves, the positive trend in the economy is particularly noticeable at ATMs. The government has eased cash restriction. As a result, every citizen is now allowed to withdraw up to 5,000 Euros monthly, since the debt crisis in 2015 put a limit of 2300 Euros per month.
The Flip Side
However, the data released on Monday is not consistently optimistic. The unexpectedly strong increase in GDP is mainly due to exports of goods and services. They rose in the first quarter compared to the previous year by 7.6 percent. Other numbers are disappointing. For example, year-on-year private consumption fell by 0.3 percent. Observers attribute the decline to the growing tax burden and declining purchasing power of households.
Even less satisfactory than consumption was the level of investments. In the first quarter, they fell by 10.4 percent compared to the previous one. This shows that Greece's recovery needs greater analysis of depth and sustainability. The country’s biggest barriers to investment are high taxation, lack of legal certainty and corruption.