Jan 31, 2019

GDP increased by 5.6% YoY in December 2018

Quick Update

  • According to the initial estimates of Geostat, real GDP growth accelerated to 5.6% YoY in December 2018 following the 2.2% increase in November 2018. Manufacturing, construction, hotels and restaurants and real estate contributed positively to economic activity, while utilities, transport and financial intermediation had negative impact.
  • Acceleration of growth in December 2018 likely reflects the higher growth of exports in categories with larger share of domestic value added, positive impact of lower oil prices as well as the stronger public spending in November and December. While the budget expenditures growth was sizeable in December, this was mostly due to the advance payments (see note on fiscal) and the full impact of the spending on growth will be materialized later in coming months with the strongest effect likely in Q2 2019.
  • At the same time, contrary to what was implied by stronger fiscal spending, further decline of imports in almost all categories (see note on external trade) indicates that domestic demand remained weak. Similar conclusion can be drawn from somewhat slower credit growth, especially on MoM seasonally adjusted terms, (see note on credit growth) and NBG buying reserves at around 4.0% of GDP in December (see note on FX interventions). 
  • Overall, growth amounted to 4.8% in 2018 — very strong growth taking into account contractionary fiscal stance and negative contribution of the developments in Turkey.