GDP alert: Economic storm brewing?

Former Minister of Finance, Konstantinos Petrides, comments on the GDP results for the 2nd quarter with five observations. In a tweet, Mr. Petridis expresses concern, as he points out that negative GDP, or significant slowdown, usually precedes every crisis. He also adds that the negative GDP will impact state revenues, greatly affecting public finances, government debt, and state ratings.

According to Mr. Petrides, these factors should raise concerns for both the government and the (responsible and non-responsible) opposition, who tend to favor increasing expenditures (often excessive and repetitive) to serve the clientelist state, which they present as a "success."

Με βάση τα αποτελέσματα του ΑΕΠ για το 2ο τρίμηνο κάποιες σημαντικές διαπιστώσεις:

1.Η συρρίκνωση του ΑΕΠ κατά 0,4% σε σχέση με το 1ο τρίμηνο είναι ανησυχητική. Αρνητικό ΑΕΠ, πέραν της περιόδου της πανδημίας είχαμε να δούμε από το 2014 οπότε επανήλθε η κανονικότατα μετά το… pic.twitter.com/d0G18I4Fur

— ConstantinosPetrides (@Petrides_C) August 16, 2023

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1. The contraction of GDP by 0.4% compared to the 1st quarter is worrisome. Negative GDP, apart from the pandemic period, has not been seen since 2014 when it returned to normalcy after the haircut. Negative GDP or significant slowdown usually appears before every crisis, as it happened in 2003 (stock market crisis that caused a significant wealth shift) and 2009.

2. The negative GDP will affect state revenues with a significant impact on public finances, government debt, state ratings, etc.

3. Already in the 2nd quarter, fiscal performances indicate a very concerning deterioration of public finances. The surplus for the first quarter was 438 million. April had a deficit of -3.1 million, May -52.4 million, and June -227.6 million. Therefore, the accumulated surplus comes from the strong surplus of the first quarter.

4. The above should raise concerns for both the government and the (responsible and non-responsible) opposition, who are inclined towards increasing expenditures (often indiscriminate and repetitive) to serve the clientelist state, which they present as a "success."

5. For the first time, we are moving based on forecasts (being done conservatively). In previous years, we falsely celebrated them exuberantly (upward).