Greek Economy Unexpectedly Averted Recession in First Quarter

(Bloomberg) -- Greece's economy unexpectedly expanded in the the first quarter, reversing an estimate that had showed it slipped back into recession.

Gross domestic product rose 0.4 percent after shrinking a revised 1.1 percent the previous quarter, the Hellenic Statistical Authority said on Friday. An initial reading on May 15 showed a 0.1 percent contraction. The data follow a report Thursday that showed an improvement in manufacturing, with a Purchasing Managers Index rising to a nine-month high, close to the key 50 level.

Greece is seeking greater clarity from creditors on measures to ease the country's debt load after the government and officials from the International Monetary Fund and euro-area institutions ended a months-long impasse over the austerity measures the government needs to take. That austerity has weighed on the economy, which remains far smaller than its pre-crisis level.

Delays in reaching last month's preliminary agreement -- a milestone the government hoped to reach before the end of 2016 -- have damped the outlook. The government cut its 2017 economic growth forecast last month to 1.8 percent from 2.7 percent.

The expansion in the first quarter was driven by consumption, which increased 0.4 percent, and gross capital formation, which expanded 48.3 percent from the previous quarter. At the same time, exports declined 2.3 percent, while investment also fell.

--With assistance from Andre Tartar Paul Tugwell and Mark Evans

To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson