Greece’s economy is growing again with real GDP expected to have reached 1.6% in 2017, according to the winter interim economic forecast, published by the European Commission today in Brussels.

According to the Greek chapter of the report “the recovery is expected to strengthen in the coming years, providing further support for employment growth. Sustained commitment to structural reforms remains vital to the continued expansion.”

According to provisional data that the Commission offers, real GDP in Greece grew by 0.3% (in quarterly basis) in the third quarter of 2017  corresponding to a growth of 1.1% (in annual basis) for the first three quarters of 2017. “This marks the first time since 2006 that the Greek economy has grown for three consecutive quarters,” says the EC.

Meanwhile the labour market continues to improve, says the EC, with the unemployment rate having fallen to 20.7% in October 2017, down 2.7 point since the end of 2016. According to the report, the improvement was driven by the increase in employment, as the size of the labour force was broadly stable.

According to quarterly national accounts data, employment rose by 1.8% (in annual basis) in the first three quarters of 2017, and employment is expected to continue growing, in line with the economic recovery. At the same time consumer price inflation reached 1.1% in 2017, “driven by the rebound in energy prices and increases in indirect taxation.” Headline inflation “is expected to decrease in 2018, as core inflation looks unlikely to fully compensate for fading base effects linked to energy prices,” states the report.

Furthermore, it notes that “net exports took over as the main driver of growth in the second and third quarters, signalling that Greece is also benefiting from the wider recovery in Europe and the improvements in the country’s competitiveness achieved by structural reforms.”

Private consumption growth “was broadly flat during the first three quarters of 2017”, which “somewhat narrowed the savings gap.” The decline in investment was likely linked to adverse effects resulting from the delayed closure of the second review of the European Stability Support Program in the third quarter.

Real GDP is forecast to reach 2.5% in both 2018 and 2019. The Commission notes that sustained improvement in the labour market and in consumer sentiment is set to fuel private consumption growth.

The business climate in Greece “is also expected to improve further,” although “financing conditions may ease only gradually, leading to moderate investment growth.”

In 2019 investment “is projected to grow more dynamically and is set to become an important positive contributor to growth.” Finally “robust foreign demand should provide a boost to net exports, which are projected to become an important growth-engine in 2018, supporting the economy’s re-orientation towards the tradable sector.”