HOLD YOUR HORSES

Why it’s way too early to celebrate Greece’s growth spurt

Here’s something we haven’t seen in a while—check out the just-published leader board of third-quarter GDP growth in the euro zone:

Third-quarter-GDP-growth-selected-euro-zone-members-Q3-vs-Q2_chartbuilder

Do not adjust your screen, that is indeed Greece at the top of the list. Last quarter, the data showed the Greek economy mired in its sixth year of recession, but a major revision to the numbers today paints a much brighter picture.

In the words of Greece’s statistics authority (pdf), the third quarter marks “the first time a continuous, coherent and comparable time series of quarterly national accounts” has been produced by the country. Until now, Greek GDP data was not easily compared with other euro zone members, as it was collected and reported in a less sophisticated way in terms of seasonal adjustments and other statistical best practices.

According to its shiny new quarterly accounts, Greece actually shook off recession back in the first quarter of this year:

Greece-quarterly-GDP-growth-rate_chartbuilder

But consider the overall size of the Greek economy—it remains more than a quarter smaller than it was at its 2008 peak, by any definition still deep in depression:

Cumulative-change-in-Greek-GDP-from-2008-peak-rate_chartbuilder

Unemployment is running at 26%, the government’s debt load is as daunting as ever, and there are questions about whether the country will be able to exit its bailout program without extra help. “While there is still a mountain of fiscal and structural reforms that need to be implemented, positive growth will help ease the social problems caused by the crisis,” Azad Zangana of Schroders wrote in a research note.

When an economy has been so weak for so long, any signs of growth take on outsized importance. But it will be a very, very long time before we can break out the ouzo to celebrate anything resembling a bona fide “recovery” in Greece.

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