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Economy

COVID-19 Effect Will Shrink Greek Economy 5-8% for 2020

ATHENS — After being on a path to recover 2-3 percent following a decade of austerity and and economic crisis that shrank the Gross Domestic Product (GDP) by 25 percent, Greece’s economy will fall another 5-8 percent in 2020 over the COVID-19 lockdown and aftermath.

The New Democracy government imposed a shutdown of nonessential businesses on March 23 before a single death, holding down the number of cases and fatalities, but the gradual reopening took three months, severely impacting many companies and workers.

Deputy Finance Minister Theodoros Skylakakis gave the estimate for the year that will be a little less than thought and under 10 percent, he said, although it’s still not known whether there will be any kind of summer tourism season, the country’s biggest revenue engine.

He said that 2021 will show a rebound with growth of about 1.87 percent but this year is a wipe-out just as the country was beginning to accelerate a slow recovery from the nightmare austerity years that required 326 billion euros ($366.82 billion) in three international bailouts to prop up the economy.

Those ended on Aug. 20, 2018 but Greece hadn’t yet made a full return to markets and there are fears many businesses will never reopen, unable to recover from the lockdown and health measures then limiting customers.

Tourism, that in 2019 saw another record 34 million visitors spending 19 billion euros ($21.38billion) could see that reduced to about 8 billion euros ($9 billion) this year as the season won’t open to most visitors until July 1 after a partial reopening on June 15. 

Skylakakis told TV station ANT1 that while the COVID-19 recession will cut deep into state revenues – the government put 17.5 billion euros ($19.69 billion) into subsidizing laid-off workers and businesses – there are plans to make tax and pension contribution cuts.

“We will certainly be able to make these cuts in the period 2021-2023, when we will start getting European (emergency aid). But we will have a problem implementing cuts in 2021,” because of the drop in revenue, Skylakakis said.

Speaking on the 2021 budget, Skylakakis said: “We will certainly be able to reduce social security contributions, but what else we can do in a difficult and uncertain budget since we can't yet predict recession with any precision, I can't say yet,” Skylakakis said.

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