Mitchell, B. (2014) “Greece – return to growth demonstrates the role of substantial fiscal deficits“, Bill Mitchell Blog: Modern Macroeconomic Theory – Macroeconomic Reality, 19 November.
We had news this week that the annual rate of real GDP growth in Greece is finally positive after two quarters of positive growth. The austerity merchants are out in force congratulating themselves on a victory. Some victory. What the official data doesn’t publish are the long-term implications of the Depression that Greece has been locked in for the last six years. I look at that question in this blog (a little). Further, despite the claims by the European Commission and the lackies that it relies on to spread its distorted economic news that Greece has achieved a primary fiscal surplus, nothing is further from the truth. The fact is that the Greek fiscal deficit expanded considerably last year and despite all the austerity is still pumping public euros into the Greek economy and therefore supporting growth. The slight return to growth is not a victory for fiscal austerity but a demonstration that if large deficits are maintained for long enough growth will eventually rear its head.
Eurostat published the preliminary estimates for the third quarter 2014 National Accounts data last week – GDP up by 0.2% in the euro area and up by 0.3% in the EU28 – which showed very weak growth overall in Europe and a further decline into recession for Italy.
I will consider that data another day.
The latest Greek National Accounts data published by the Hellenic Statistical Authority (El.Stat) came out on the same day and the El.Stat – Press Release – reported what might be considered to be good news.
The agency announced that:
- Available seasonally adjusted data1 indicate that in the 3rd quarter of 2014 the Gross Domestic Product (GDP) in volume terms2 increased by 0.7% in comparison with the 2nd Quarter of 2014.
- Available non-seasonally adjusted data indicate that in the 3rd quarter of 2014 the Gross Domestic Product (GDP) in volume terms increased by 1.7% in comparison with the 3rd Quarter of 2013.
The following graph comes from the El.Stat – data – and shows annual (blue bars) and quarterly (red line) real GDP growth from the mid-1990s to the third-quarter 2014.
- Weisbrot, M., (2014) “Greece: Signs of Growth as Austerity eases“, The Guardian, 23 January.
- Nicos, Christodoulakis, (2013) “From Grexit to Growth: On Fiscal Multipliers and How to End Recession in Greece“, National Institute Economic Review, No. 224, pp.66-76.
- Katsikas, D. (2012) “Greece needs plans for growth, not eurozone exit“, Public Service Europe, 23 March.