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Economy

Lockdowns Shrink Greece’s Economy, New Democracy Sees Growth

ATHENS – While COVID-19 lockdowns aimed at slowing the spread of the Coronavirus haven't worked and seen the economy fall some 9 percent, the New Democracy government has planned a recovery expecting a gradual rebound.

Prime Minister Kyriakos Mitsotakis' Cabinet approved his economic plan that predicts 7 percent growth over the next six years into 2027 and hopes to create 200,000 jobs in a range of sectors.

Greece is banking on it share of European Union grants of 19.4 billion euros ($22.78 billion) and another 12.7 billion euros ($14.91 billion) in cheap loans, about 16 percent of the Gross Domestic Product (GDP.)

That's expected to fuel growth although the effect of the pandemic could see thousands of businesses failing, especially in the food sector involving restaurants, bars, taverns and caterers not allowed to operate more than half the previous 12 months going back to March 2020.

Mitsotakis called his plan “a bridge to the post COVID-19 era,” also counting on a slow-rolling vaccination program to get people back to work and out of their homes although masks could be required for years some health experts said.

Under a 2020 agreement, the European Commission will be allowed to raise up to 750 billion euros ($8804.8 billion) in capital markets and pass on the money to member states worst hit by the pandemic through payments linked to jointly agreed reform and investment plans, partly as grants and partly as loans.

The Commission expects the first tranches of the package to be paid out in the summer, said Reuters, with Greece opening to tourists on May 15 who have been vaccinated or can show negative COVID-19 tests to avoid quarantine.

The Greek plan will now be debated in Parliament before being submitted in its final form to Brussels, ahead of an end-April deadline, Mitsotakis reportedly telling his ministers it could mobilize nearly 60 billion euros ($70.44 billion), adding leverage from the private sector via equity capital and loans.

The plan’s four main pillars comprise projects on green energy, digitalization, boosting employment and investment and reforms to upgrade education and health, Mitsotakis said.

“It is a unique opportunity to radically change the Greek economy’s model and lead it towards a more outward-looking, competitive one with a more efficient and digitalized state and a tax system friendly to growth,” he said.

More than one-third of the plan’s funds will be allocated to electric public transports, biodiversity and sustainable and renewable energy in a country that still counts on coal and has done little to harness solar power. 

“This leap will be just the start, the first kilometer of a marathon that will end when all the funding is absorbed by 2026 at the latest,” Mitsotakis also said according to the news agency's report.

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ATHENS - After saying a Value Added Tax (VAT) on food as high as 24 percent couldn’t be reduced because it was unaffordable, the New Democracy government has given a cut from that rate to 13 percent for taxis.

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