The
Greek economy grew in the second quarter, surprising pretty much everyone.
The
Greek economy grew in the second quarter, surprising pretty much everyone.
The data -- still preliminary at this
point -- shocked analysts who widely expected GDP to shrink.
But it's important
to note that the data covers the period just beforeGreece closed its banks and restricted cash withdrawals as it
struggled with a deep financial crisis. The banks and Athens stock market have since reopened, but some restrictions
remain.
Greek prices were
falling by over 2% a month in the period, and retail sales were growing. That
could mean the surprise growth was partly powered by increased consumption, as
Greeks took money out of the banks and stocked up in anticipation of the
shutdown.
Analysts warn the growth is unlikely to
last. The financial crisis hit Greece's economy hard. Manufacturing plunged to
record low levels in June, as many companies struggled to pay for imports and
operate normally.
"Don't forget
that the current bailout deal document still forecasts 2.3% contraction for
2015 and 1.3% next year with more painful austerity needed to help towards
economic recovery," said Mike van Dulken, head of research at Accendo
Markets.
Greece and its
creditors completed negotiations on the terms of a third bailout package on Tuesday. The Greek parliament will
vote on the package on Thursday.
The deal, worth up
to 86 billion euro ($95 billion), still needs to receive a stamp of approval by
the eurozone leaders, but is expected to be finalized within days. A big chunk
of that money will be used to prop up the banks.
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