As COVID-19 Pandemic Lingers, Greek Economy Keeps Shrinking

December 15, 2020

ATHENS – Just starting a faster recovery from a near decade-long fiscal and austerity crisis, Greece’s economy – battered by two COVID-19 lockdowns, will contract at least 10-11 percent and take two years to come back.

That was the dire forecast from the Bank of Greece in its Interim Report on Monetary Policy for 2020 as a second wave of the Coronavirus went into a sixth seek, the pandemic expected to last deep into 2021 even with vaccines coming, said the business newspaper Naftemporiki.

The bank had been slightly more optimistic in previous predictions but revised downward its expectations for a recovery, with many businesses expected to close, unable to sustain themselves after the lockdowns.

The primary prognostication estimated the economy shrinking this year 10-11 percent after falling 25 percent during the years from 2010-18 of three international bailouts of 326 billion euros ($396.41 billion) that came with attached brutal austerity measures.

The bank said there would be growth of 4.2 percent and 4.8 percent for 2021 and 2022 but combined wouldn’t restore the pandemic losses but hoping for renewed domestic demand and foreign investors returning.

A "milder" scenario is based on the prospect of a quicker return to normal social and business activity, with Gross Domestic Product (GDP) falling 9 percent this year, rising 4.8 percent in 2021 and 5 percent in 2022, the paper said.

There’s also a worst-case scenario as no one knows how many Greek businesses COVID-19 will take under, that forecast seeing an 11 percent recession this year and coming back 3.2 percent in 2021 and 4.5 percent in 2022.

In an earlier mid-year projection, the Greek central bank had put the economic contraction at 9.4 percent this year. In the report, it said it expected the economy to recover with growth of 3.2 percent in 2021, said Reuters in a contrasting version.

The government now expects a contraction in output of around 10.5%, according to the latest 2020 projections in the 2021 government budget now pending approval in the country's Parliament, the news agency said.

A 10-week first lockdown that began March 23 closed non-essential businesses and there was no real rebound during the summer when tourism fell off the charts too because travelers from hard-hit countries weren’t allowed in and international air traffic ground to a near-halt.

The economy shrank 14.1 percent in the second quarter as the pandemic raged, the deepest drop for any quarter in 25 years but there was 2.3 percent growth for the July-September period with limited tourism but output was 11.7 percent lower than the same time in 2019, the news agency reported.

The New Democracy government of Prime Minister Kyriakos Mitsotakis imposed the second lockdown on Nov. 7, due to lift Dec. 7, but now pushed back until Jan. 7, 2021 at the earliest because restrictions were less severe and saw more people out for permissible missions such as going to supermarkets, banks, pharmacies and doctors, taking exercise or walking a pet.


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