Greece Macro Monitor (21 August, 2015)
Full-year GDP likely to contact by less than expected earlier
Based on the analysis presented in this note and taking into account the above-consensus Q2 GDP reading, we see upside risks to the official (and our earlier) forecast for Greece’s full-year real output growth. Whereas our earlier NOWcasting model estimates & short-term forecasts pointed to a full-year real GDP growth reading of -2.05% (and the respective European Commission forecast stands at -2.3%), we now see considerable upside risks to the above projections, looking for a realization closer to -1.5%. That is, provided that:i) the revised national accounts data for Q2 2015 (due on August 28) will not deliver any major surprises in the form of sizeable downward revisions to the Q2 flash GDP estimate; and ii) the just-announced September 20th national election will not lead to a prolonged period of domestic political uncertainty. For next year, our baseline scenario for real GDP growth falls close to the current European Commission forecast of -1.3%. The latter assumes a quick recovery of economic activity after a relatively weak start in early 2016 that would be sufficient to more than offset the negative carryover from the expected weakening of the domestic economy in H2 2015.
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