Is the Recession in Greece Ending?

The Hellenic Statistical Authority (ElStat) reports today that real GDP in the third quarter of 2013 has fallen by “only” 3 percent. More in detail, from their press release:

Total final consumption expenditure recorded a decrease of 6.6% in comparison with the 3rd quarter of 2012 (Table 4).
Gross fixed capital formation (GFCF) decreased by 12.6% in comparison with the 3rd quarter of 2012 (Table 4).
Exports increased by 5.7% in comparison with the 3rd quarter of 2012 (Table 4). Exports of goods increased by 2.4% and exports of services increased by 8.8%.
Imports increased by 2.3% in comparison with the 3rd quarter of 2012 (Table 4). Imports of goods increased by 2.6% and imports of services increased by 1.1%.

(Imports will be growing with exports also because, as we have argued, a large and growing portion of Greek exports are intra-industry trade connected to oil products.)

My personal guess is that these figures will be revised downwards.

In the chart above we show exports of services in euros, as published by ElStat, together with the Turnover Index in Accommodation and Food Service Activities, also published by ElStat. The definition of the index given by Eurostat is as follows: “The definition of turnover is rather straightforward. It comprises basically what is invoiced by the seller. Rebates and price deductions are taken into account as well as special charges that the customer might have to pay. Turnover does not include VAT or similar deductible taxes.”

The two figures in the chart seem to move with the same seasonal pattern (although they are not strongly correlated in growth terms). If we take the value of the index as a predictor of the value of exports for the third quarter of 2013, we should expect exports of services to grow at about 1.2 percent over the same quarter of the previous year — or less, since the chart suggests that exports are less volatile than the turnover index.

This is a much lower value than what ElStat expects for exports of services. Given that all other components of demand are in free fall, a decrease in real GDP of 3 percent YoY in the third quarter of 2013 seems to me to be on the optimistic side.