Friday, 30 September 2016

Why Greek GDP might actually increase in Q3.

The Greek government has repeatedly stated its strong belief that Greece's GDP will rise in the 3rd quarter and the economy will turn the corner. And of course they are doing their best to help bring this about. 

No, I'm not talking about fudging official GDP figures but for a whole different thingy. We got a lot of articles this summer about how revenue authority's inspections in islands (infamous for tax evasion during summer months) did intensify and as a result VAT receipts spiked

This way, government officials try to kill two birds with one stone. VAT receipts rise and they stave off the need for the introduction of new measures in case deficit targets are missed. At the same time they "de-grey" a chunk of retail sales that was formerly part of the grey economy. The "de-greying" of a part of retail sales that would otherwise go unreported works towards increasing households' final consumption, hence towards increasing 3rd quarter GDP.

source: ELSTAT
Today, retail sales figures for July were reported and a 8,8% spike was recorded. This was the first month during 2016 that retail sales volume increased. The biggest part of this increase was due to the fact that this is compared to the very month that capital controls were introduced last year (and as a result firms were unable to restock properly, driving sales volume down by 7,1% YoY). Hence the base effect was one of the drivers. The other driver was increased revenue authority's inspections that helped the official retail sales figure climb. 

source: ELSTAT, own calculations
If this trend kept on for the remaining two months of Q3 (and according to news reports it did) then Q3 GDP could very well record a year-on-year increase. 

P.S. Someone could ask why am I attributing this spike to increased tax inspections and not to increased tourism related expenditures. That is simply because travel services exports decreased in July as they have for most months of 2016. 

source: Bank of Greece

Friday, 9 September 2016

A positive sign from Greece's housing market.

Today, after quite a long time, I took a peek at the rentals component of the Harmonised Index of Consumer Prices. And I was in for a surprise. The index has stopped falling, on a monthly basis, for the past 7 months.

source: Eurostat, own calculations

The question that instantly springs to mind is "are we closing in on the bottom here?". Well, it certainly seems like it, not only from a rentals perspective but also from an apartments' prices perspective.

Actually, the rentals' trajectory lately is quite similar to that of apartment prices. 

source: Eurostat
source: Bank of Greece
Let's see how the wave of housing auctions will affect the market and if it will kill these quasi-green shoots in their tracks. Let's at least hope that this time round the market will be allowed to follow its path without any political disruptions that could delay further the, so much needed and awaited, stabilisation (and hopefully recovery).