Macro roundup: Greece keeps building

Pandemic can't halt construction's rebound from debt crisis

Amidst the worrying outlook for Greece’s economy, the construction sector is continuing to ride out the current storm without much bother.

Building activity in September, measured by number of new building permits issued, rose 29 percent in September compared with the same month a year earlier, according Elstat data released today. From January to September, activity increased 15.5 percent compared with 2019.

No doubt it must help that with construction work taking place outdoors so much, the sector has been less impeded by restrictions placed on other parts of the economy. Also, as the fact that buildings are large capital outlays that need a degree of long-term planning they are less susceptible to short-term swings. But probably the biggest factor in its resilience is that the sector took such a battering during the debt crisis of the last decade that the only way left for it to go was up.

Construction’s continued growth can also be seen in last week’s gross domestic product data for the third quarter, which showed investment in dwellings growing 6.6 percent in the third quarter from a year earlier, and investment in other buildings increasing 3.3 percent. Those numbers should be seen in light of pent-up investment needs following the collapse of total investment in those two categories from 34 billion euros in 2007 to 5.7 billion euros last year.

Prospects for the sector’s continued recovery are helped by the Recovery Fund package from the European Union, which should see it the first of the 16 billion euros in grants dispersed next year. Construction will be near the forefront of the government’s efforts to stimulate the economy out of its crisis, as well as building out green energy infrastructure and retrofitting existing buildings to improve their energy efficiency.

Other data

  • The unemployment rate dropped to 16.1 percent in September from 16.5 percent the month before.

  • Greece’s EU-harmonized consumer price index fell 2.1 percent in November from a year earlier, compared with a 2 percent drop in October.

  • Industrial production dropped 3.7 percent in October from a year earlier, with manufacturing falling by 3.1 percent.

  • According to Bank of Greece data on commercial real estate, the office price index was unchanged in the first half of this year compared with the previous six months, while retail property prices grew 1.1 percent.

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Next week’s key data

  • January-November central government budget execution (Finance Ministry, probable date)

  • October data on business revenue (Elstat)

  • Third-quarter unemployment (Elstat)

Elsewhere on the web

  • Exante Data this month launched a new substack that’s worth checking out. Its opening run features several contributions from Chris Marsh, whose own blog, the The General Theorist, I’ve linked to a few times now in this newsletter as he often writes about Greece and the euro area in general

  • A glass-half-full take at those Q3 GDP numbers from the Macro Tragedy blog

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