Coronavirus Markets Fallout Seen Putting Brakes on Greece’s Recovery

February 28, 2020

ATHENS – Market plunges over the financial effect of the coronavirus – including a fall in the Athens Stock Exchange – has Greece’s New Democracy government expecting it could slow a slow recovery from a near decade-long economic and austerity crisis.

The Finance Ministry has been asked to prepare a preliminary assessment of the possible impact of the coronavirus on the economy, Mitsotakis said but an official at the Bank of Greece told Reuters Thursday that the country’s central bank was sticking to its economic growth projections so far.

But there was a sudden rise in interest rates for Greek 10-year bonds over the coronavirus effect, with the business newspaper Naftemporiki saying that could keep the government from going into the markets to further accelerate a slow recovery.

Greece had relied on three international bailouts of 326 billion euros ($359.86 billion) from 2010 until they ran out on Aug. 20, 2018, and the election of New Democracy in July 7, 2019 snap elections – ousting the former ruling Radical Left SYRIZA – brought a rebound.

The yield on the 10-year bond returned to level above 1 percent, rising 0.14 percent in just one trading session to 1.21 percent, and with the “spread” vis-a-vis the corresponding German 10-year bond rising above 170 points, the paper said.

That happened just a week after the yield for Greek debt dipped to an historic low and under the 1-percent threshold, leading the government to consider jumping back into the markets with both feet.

Then came the coronavirus, with four cases confirmed in Greece and the government putting in place a contingency plan to shut down public gathering spots, canceling the annual pre-easter carnival across the country and fears spiking.

Economic activity in some parts of Greece have been brought to a halt, said Kathimerini, as the government and economists scramble to gauge the fallout and how long it could last, with the critical summer tourism season approaching.

A Finance Ministry official not named told the paper that if the effect is short-lived that despite the temporary hit the consequences will be limited and the fiscal cost will be minimal. But if it grows, all bets are off. “Thankfully we have the cash buffer and fiscal margins,” said another official also not named.

If the phenomenon grows, the country’s growth and fiscal program could suffer a serious blow just as Greece is emerging from its decade-long crisi, analysts told the paper.

Economics professor Giorgos Petrakis said he applied the Oxford Economics methodology at the University of Athens which said that if restrictive measures were imposed for a month in two regions of Macedonia, similar to what happened in hard-hit northern Italy, that Greece’s Gross Domestic Product )GDP) would shrink 0.2 percent in the first quarter.

If the effect continues after March, that negative impact of 0.1-0.3 percent of GDP will expand to the whole year. Ending hopes for 2-2.8 percent growth from several indicators, including the European Commission and Greece’s government.

The biggest catalysts would be drops in tourism, exports and consumption and the interruption of the supply chain are the main factors that affect the GDP just as Mitsotakis said the country was coming back and he was reaching out to foreign investors.

The impact on tourism could be the heaviest with Greece shutting down for now its visa office in China, where the virus began, which could lose 200,000 visitors from that country and the phenomenon spreading and tourists shy away from traveling.

In 2019, Greece collected 18 billion euros ($19.87 billion) from tourism, the biggest revenue driver in the country’s GDP of 181.44 billion euros ($200.3 billion) and on a roll with consecutive record years bringing 31 million tourists last year.


ATHENS – A Greek Internet protection group said a police program that would scan people's faces and fingerprints goes against international human rights and is an invasion of privacy that could worsen discrimination.

Top Stories


ANKARA - Turkey's swiveling between offering diplomacy or gunboats and demands that Greece take troops off its islands near Turkey's coast is roiling the waters between the countries and plans to hunt for energy.

United States

NEW YORK – Grammy-nominated artist Eric Alexandrakis announced his latest release due out on February 1, titled Good Girls Never Waltz With Me, another new genre-bending addition to his critically acclaimed TERRA series of releases.

General News

ATHENS – Five members of the World Hellenic Interparliamentary Association (WHIA), with Rhode Island State Senator Leonidas Raptakis as head of the group, visited Evros on January 12-13.


Despite Huge Volcano Blast, Tonga Avoids Widespread Disaster

WELLINGTON, New Zealand — The blast from the volcano could be heard in Alaska, and the waves crossed the ocean to cause an oil spill and two drownings in Peru.