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Greek economy grew 0.8% in Q2, averted recession in Q1: official

A customer browses a display of shoes for sale beneath a Greek national flag outside a store in Thessaloniki, Greece, on Aug. 11, 2015.

[ATHENS] Greece's economy expanded by 0.8 per cent in the second quarter of 2015 over the last three months, the national statistics agency said Thursday, adding that the country escaping recession in the first quarter.

According to the new figures, the Greek economy posted zero growth in the first quarter of the year after having contracted 0.2 per cent in the last quarter of 2014 - thus averting two periods of decline constituting recession.

The figures showed second quarter growth up 1.4 per cent compared with the same period the previous year.

Analysts had predicted a 0.5 per cent contraction in the second quarter.

The news came as a rare ray of light for the debt-swamped eurozone country, as its parliament prepares to vote Thursday on a new 85 billion euro (S$132.4 billion) bailout deal with international creditors - its third rescue package in five years.

But according to economists Jamie Murray and David Powell at Bloomberg Intelligence, the "flattering real GDP belies weakness."

Nominal GDP which is not adjusted for inflation shrank 0.7 per cent in the second quarter, meaning the growth in real GDP was largely due to falling prices, they said, also noting that there could be future revisions.

"One possible explanation for the narrative around the numbers is that the threat of capital controls and their subsequent introduction may have prompted some unusual behavior," including Greeks boosting spending before they got cut off from accessing their money, the two economists told Bloomberg.

"Greece's GDP figures for Q2 brought some rare good news, but they relate to an entirely different economy than the one currently being strangled by capital controls," said economist Jonathan Loynes at research firm Capital Economics.

"But the figures do not change our view that the economic assumptions built into the bailout plan are likely to prove far too optimistic," he said.

Athens and its creditors are under pressure to approve the draft accord in time to meet an August 20 deadline for the repayment of some 3.4 billion euros Greece owes the European Central Bank.

The growth figures also came after the European Union on Wednesday forecast the Greek economy - which only emerged from six years of brutal recession in 2014 - shrinking 2.3 per cent in 2015 and 1.3 per cent in 2016.


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