Ethniki Bank: Large increase in economic activity in April and May

Ethniki Bank proceeded with an upward adjustment of its forecasts for the Greek economy, after the strong response of the market to the gradual opening of activities from the beginning of April.

Based on the updated estimate of the bank’s financial analysis department for the whole of 2021, there are now strong chances that the annual GDP growth forecast in the basic scenario of the National Bank for the whole of 2021, will exceed 4.7%.

This estimate incorporates a forecast of an annual increase in tourism revenue of 80% – with revenues, however, remaining 55% lower than in 2019 – which is still reasonable, based on early indications that tourism traffic has more than doubled from Q3 2021 onwards.

In addition, the available economic indicators data for the period April-May show a strongly positive reaction of economic activity to the lifting of restrictive measures due to the pandemic, predicting a strong recovery of GDP in the second quarter of 2021.

Post-lockdown indicators

In particular, the EIB’s monthly GDP estimate – which combines information from high-frequency and economic indicators with fiscal and financial data – indicates an annual growth of 9.7% in April.

At the same time, the activity seems to have increased by 0.6% on a seasonally adjusted monthly basis compared to March 2021.

The positive trend seems to be further strengthened in May – based on specific available data related to mobility and financial transactions – with this indicator predicting GDP growth of around 11% per year and 2.4% on a monthly basis, as more sectors of the economy open and uncertainty recedes.

Thus, the updating of the bank’s index based on the latest data indicates a decrease in GDP in the first quarter of 2021 less than 7.5% per year (initial estimate of Ethniki Bank: -9.5% per year – March 2021) following an annual decrease of 7.9 % in the 4th quarter of 2020.

The GDP of the Q1 is now estimated to increase – for the 3rd consecutive quarter – at a rate of 1.0% on a seasonally adjusted quarterly basis.