ATHENS (Reuters) - Greece’s economy contracted from October to December after two straight quarters of growth, the statistics service (ELSTAT) said on Tuesday, with its performance in the last quarter of 2016 turning out worse than expected.
The seasonally adjusted flash estimates showed a 0.4 percent decline in economic output in the fourth quarter, compared with gross domestic product growth of an upwardly revised 0.9 percent in the third quarter.
Economists polled by Reuters were expecting a 0.4 percent quarter-on-quarter growth in October to December.
Faced with a bailout review entailing a liberalisation of labour laws, Athens is keen to show that taxation and pension cuts that came with last year’s 86-billion-euro aid deal will bear fruit and lead to recovery this year.
The data showed the 175 billion euro (149 billion pound) economy grew at annual 0.3 percent pace in the fourth quarter, at a much slower clip than in July to September, when it expanded by an upwardly revised 2.2 percent.
The EU and the IMF expect the economy to rebound by 2.7 percent this year, while the Bank of Greece projects it will expand by 2.5 percent, provided the second bailout review, which has dragged on for months, is concluded soon.
The flash estimates are expected to be revised on March 6, the statistics office said.
“The Q4 GDP data translate into a full-year real growth reading of 0.3 percent, which is in line with the revised European Commission forecast and compares with a -0.3 percent estimate in the 2017 budget,” Eurobank economist Platon Monokroussos said.
National Bank economist Nikos Magginas said the upward revision of third quarter data showed a stronger than initially expected support from tourism, which waned in the final quarter of 2016.
Economists also blamed the quarter-on-quarter economic output decline in the fourth quarter partly to the fiscal drag from increased tax payments during the period.
“We are looking for a gradual acceleration of GDP growth in the following quarters, provided that no major delays will be encountered in completing the 2nd programme review,” Monokroussos said.
Reporting by George Georgiopoulos; Editing by Angus MacSwan