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| Greece records surprise 0.8% economic growth in second quarter | |
| (35 minutes later) | |
| Greece has stunned the financial markets by announcing that its economy grew by 0.8% in the three months leading up to the crisis that forced the government in Athens to close the banks and introduce capital controls. | Greece has stunned the financial markets by announcing that its economy grew by 0.8% in the three months leading up to the crisis that forced the government in Athens to close the banks and introduce capital controls. |
| Figures from Greece’s statistical agency ELSTAT showed that the country grew more strongly between April and June than the UK, which advanced by 0.7%, even though the last few weeks of the quarter in Greece were dominated by reports of money leaving the country and fears of a debt default. | Figures from Greece’s statistical agency ELSTAT showed that the country grew more strongly between April and June than the UK, which advanced by 0.7%, even though the last few weeks of the quarter in Greece were dominated by reports of money leaving the country and fears of a debt default. |
| Related: Greek economy posts surprise recovery ahead of bailout vote – live | Related: Greek economy posts surprise recovery ahead of bailout vote – live |
| ELSTAT also revised away a fall in gross domestic product in the first three months of 2015 and now says the economy was at a standstill during that period. | ELSTAT also revised away a fall in gross domestic product in the first three months of 2015 and now says the economy was at a standstill during that period. |
| As a result, Greece was no longer technically in recession over the quarter since the economy’s output did not decline for two successive quarters. | As a result, Greece was no longer technically in recession over the quarter since the economy’s output did not decline for two successive quarters. |
| The unexpected boost for Prime Minister Alexis Tsipras comes as Greece’s parliament meets in emergency session on Thursday to ratify a new bailout deal, although it is unclear whether the multibillion-euro agreement had the vital backing of Germany. | |
| Despite rebellion in the ranks of Tsipras’ leftist Syriza party, the 400-page text is thought likely to pass through the Athens legislature with the support of opposition parties in a vote not expected until the early hours of Friday. | Despite rebellion in the ranks of Tsipras’ leftist Syriza party, the 400-page text is thought likely to pass through the Athens legislature with the support of opposition parties in a vote not expected until the early hours of Friday. |
| However, the rescue package, worth up to €85bn (£60bn) over three years and urgently needed to prevent the debt-stricken country defaulting and to keep it in the euro, must still be approved by the other eurozone member states at a meeting of finance ministers in Brussels on Friday afternoon. | |
| The deal, which surrenders powers over huge areas of economic and social policymaking to Greece’s international creditors, also has to be ratified by a number of national parliaments, including Germany’s – a process Athens wants completed in time for it to make a major €3.2bn payment to the European Central Bank on 20 August. | The deal, which surrenders powers over huge areas of economic and social policymaking to Greece’s international creditors, also has to be ratified by a number of national parliaments, including Germany’s – a process Athens wants completed in time for it to make a major €3.2bn payment to the European Central Bank on 20 August. |
| One explanation for the surprise pick up in Greek growth over the second quarter was that imports collapsed as the government of Alexis Tsipras became embroiled in long talks with creditors. | |
| A breakdown of the figures also showed that deflation played a part in boosting GDP. Activity contracted slightly in the second quarter but prices fell faster, resulting in a rise in real GDP, which is adjusted for changes in the cost of living. | |
| ELSTAT warned that the flash estimate of growth in the second quarter was likely to be revised after more data had been collected. | |
| “Users should note that the present flash estimates are expected to be revised when provisional estimates are produced and disseminated on August 28 on the basis of updated primary data that will have become available at that point.” | “Users should note that the present flash estimates are expected to be revised when provisional estimates are produced and disseminated on August 28 on the basis of updated primary data that will have become available at that point.” |
| The worst of the Greek crisis occurred in July, with the banks shut for three weeks and restrictions put on cash withdrawals. As a result of the almost complete shutdown of the economy, the International Monetary Fund believes the Greek economy will shrink by around 2% in 2015 as a whole. | The worst of the Greek crisis occurred in July, with the banks shut for three weeks and restrictions put on cash withdrawals. As a result of the almost complete shutdown of the economy, the International Monetary Fund believes the Greek economy will shrink by around 2% in 2015 as a whole. |
| Some analysts believe that the decline will be much more profound given that capital controls are still in place. | Some analysts believe that the decline will be much more profound given that capital controls are still in place. |