Talking Points
- First-quarter Greek GDP data showed an improvement but the economy still contracted again.
- The Euro was unmoved by the figures, with Greece no longer a major market worry.
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Greece’s economy contracted again in the first quarter of 2017 but by less than in the previous quarter, according to the latest official “flash” data. The figures showed a fall of 0.1% quarter/quarter, better than the previous 1.2% contraction. Year/year the economy shrank by 0.5%, also better than the previous 1.1%.
However, Greece has ceased to be a major concern for the financial markets and the Euro was unruffled by the news, continuing its Monday climb higher that is taking it ever closer to the key 1.10 level.
Chart: EUR/USD Five-Minute Timeframe (May 15 Intraday)
On Sunday, the Greek government cut its GDP growth forecast for the current year to just 1.8% from its previous estimate of 2.7%, well below the European Commission’s 2.1% economic growth estimate published in February.
The revision was included in the government’s economic plans for 2017-21 presented to parliament at the weekend, which included a tighter budget including new austerity measures. These are designed to meet the demands of Greece’s creditors that are still negotiating with the country to agree on a bailout that will provide debt relief for the nation.
Greek Prime Minister Alexis Tsipras has pledged that his government will not implement new austerity measures without debt reduction in exchange.
Tsipras met Christine Lagarde, managing director of the International Monetary Fund, on the sidelines of a meeting in Beijing today and, according to the IMF, “exchanged views on next steps and the importance of controlled implementation of agreed reforms and support from Greece’s partners, including appropriate debt-relief measures”.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
Follow Martin on Twitter @MartinSEssex
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