ATHENS – Adding to some 17.5 billion euros ($19.65 billion) in subsidies to laid-off workers and businesses temporarily closed during a lockdown aimed at preventing the spread of COVID-19, Prime Minister Kyriakos Mitsotakis said another 3.5 billion euros ($3.93 billion) is coming for the hardest-hit companies.
It will include a reduction of the corporate tax deposit for 2021 those who are losing money and desperately trying to hang on with the gradual lifting of the lockdown but customers and clients reluctant to make the full plunge back to normal life.
The deposit will be eliminated entirely for enterprises and sectors whose first quarter revenues dropped by 35 percent compared to the same period in 2019, the report said, although an uncounted number of stores and businesses have already gone under.
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.
Greece's central bank said the country could avoid a major recession if it makes good use of emergency EU support funds and does not suffer a major renewed outbreak of COVID-19, but the pandemic is likely to compound long-term financial problems.
In a 210-page report, the Bank of Greece said its main forecast for 2020 is for an economic contraction of 5.8% followed by a recovery of 5.6% next year and 3.7% in 2022. But if there is a second wave of COVID-19 and the economy does worse, GDP could shrink 9.4% in 2020.
The pandemic, it said, would reverse progress made on Greece's major long-term problems, including high unemployment and public debt as well as the country's huge stock of non-performing loans that only recently dropped to below 40% percent of the total.
A major drop is expected in tourism which in 2019 brought in more than 18 billion euros ($20.3 billion), about 10% of the country's annual output, the sector being the biggest revenue engine and key to accelerating a recovery.