The Hellenic Fiscal Council (HFC) released a report on Wednesday, which noted that the Greek economy in 2018 showed the fastest growth rate since 2007.
The report which focuses on macroeconomic and fiscal developments, recorded a real GDP growth of 1.9%, and also noted positive developments in other areas in the past year, including the labour market, overall fiscal performance and the bonds market, which Greece entered anew after the recent bond issue.
According to the report, the positive performance is mainly due to higher private consumption and faster exports growth against imports of goods and services, leading to a deficit reduction of about 2.5 billion euros.
Specifically, private consumption increased by 1.1% in 2018, predominantly due to increased employment in 2018 and on overall improvement in consumer confidence. Positive developments also include a significant increase in export value of 8.7%, also thanks to an increase in exports of goods and services, mainly in tourism.
The report also shows a notable and steady improvement in the Greek labour market throughout 2018.
In December 2018, the seasonally adjusted unemployment rate was limited to 18% compared to 18.3% of the previous month and 20.8% in December 2017.
Recruitment of employees with private contracts in 2018 amounted to 2,668,923 against a total of 2,527,920 of redundancies or retirements.
Therefore, the balance of paid employment flows was positive for the sixth consecutive year and stood at 141,003 new jobs, slightly lower than in 2017 by 2,542 jobs.
New jobs in the first two months of 2019 reached 5,507 against 86 in the same time in 2018.
Compared to the fourth quarter of 2017, most industries saw an increase in their added value. Particularly high performance was achieved in the construction industry by approximately 11%.
Good results were also recorded in the wholesale retail trade sector as well as in the performance of mines and quarries yet the largest decline in added value was recorded in the financial and insurance business, as both fell by 11.4%.
The economic performance index improved in February 2019, following a small decline in January, standing at 101.3 points.
However, the February price index remains lower than in the previous year. Positive trends in the last month are contributing to an improvement in the balance of expectations in general services and industry, but despite improvements, consumer confidence and business expectations in construction remain negative.
Direct foreign investments remained at a relatively high level in 2018, standing at 3,640 million euros, up by 442 million euros compared to the previous year (+13.8%). This performance is the highest in the last 12 years, although direct foreign investments remain low as a percentage of GDP (around 2%).
The report says that in January 2019, the primary output of the state budget deteriorated, compared to 2018, due to the large decrease in inflows of payments, while the cost of employee benefits increased due to the payment of 321 million euros in lump sum payments related to retired and active civil servants including the military, doctors, academics, lawyers.
However, the primary result of the first month of 2019 showed a significant improvement against the target, as the provisioning for lump sum payments was much higher, at 982 million euros.
The Hellenic Fiscal Council, chaired by Panayotis Korliras, highlights the March 2019 issue of the Greek state ten-year bond, with an interest rate of 3.875%. This raised 2.5 billion euros for the state, and upgraded the creditworthiness of the Greek economy, as per Moody's, from B3 to B1.
An independent authority, the Council reports to the Greek Parliament when requested or when required before a parliamentary committee, and submits to Parliament an annual report of activities along with the Council’s audited financial statements.