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Different View: Ratings Agencies See Greek Economy Sinking

Αssociated Press

Pedestrians walk in Ermou street, central Athens, one day before the new national lockdown starts, on Friday, Nov. 6, 2020. (AP Photo/Petros Giannakouris)

ATHENS -- Far more pessimistic than the ruling New Democracy’s rosier estimates of a recovery as the COVID-19 pandemic rolls on, ratings agencies are downgrading their estimates of how fast the economy will come back.

Prime Minister Kyriakos Mitsotakis’ government had been accelerating a slow comeback from a near decade-long crisis made tougher by austerity and the former ruling Radical Left SYRIZA’s 4 ½-year anti-business tenure.

The appearance of the Coronavirus changed all that and the economy is seen shrinking as much as 10 percent although the government’s forecasters said they see a slow return to growth.

The ratings agencies though said a third lockdown and the slow vaccine campaign has made them less favoring a quicker growth path and predict a deep recession in the first quarter of 2021, especially with uncertainty over whether tourism will come back another factor.

ING chief economist Carsten Brzeski told Kathimerini that the first three months of 2021 will see a 13 percent shrinkage for the economy and that the losses could go on all year.

“All this means that overall growth in 2021 will range around two percent and Greece will have to wait even longer, up to the second half of 2023, before it returns to its pre-crisis levels,” he said.

Jakob Suwalski, lead analyst on Greece at Scope Ratings, said his agency is also downwardly revising its estimates about Greek growth this year, telling the paper that growth could reach 3.5 percent, down 1 percent from earlier estimates.

He said that reflected economic losses associated with travel restrictions across Europe, Greece relying on tourism as its biggest revenue engine, bringing in as much as 18-20 percent of the Gross Domestic Product of 165.9 billion euros ($200.3 billion.)

UniCredit also expects a double-digit recession over the first quarter with the lockdown still on and restaurants, bars and taverns not seen opening until the spring, many facing extinction by then.

Tullia Bucco, the bank’s head analyst in Greece, told the paper the contraction will be 11.3 percent in the first quarter on an annual basis and a 1.3 percent drop on a quarterly basis, another dire expectation.