The aftermath of the COVID-19 pandemic that brought a lockdown closing non-essential businesses for six weeks – hotels for longer – will be punishing for the Greek economy, a report from the Swiss bank UBS said.
The New Democracy government had been luring foreign investors and accelerating a slow recovery from a near decade-long economic and austerity crisis with the Aug. 20, 2018 end of three international bailouts of 326 billion euros ($358.02 billion) before COVID-19 hit.
What was expected to be growth this year as high as 2-3 percent, after a 25 percent contradiction, will instead be a recession of at least 10 percent, the bank said.
Estimates from other analysts have said it could be even worse depending on the effect on tourism, the country’s biggest revenue engine that brings in 18-20 percent of the Gross Domestic Product (GDP) of 182.39 billion euros ($200.3 billion.)
Adding to Greece’s dilemma, the debt that rises by the second despite the rescue packages will get much worse and hit about 200 billion euros ($219.64 billion,) far above what the government said was already likely unsustainable before a recovery began.
The investment bank was more optimistic about Greek bonds being included in the European Central Bank’s "quantitative easing" debt buy-back scheme as the ECB is one of the Troika of the country’s creditors, along with the European Union and the European Stability Mechanism.
UBS analysts focused on tourism and said the economic damage for that crucial sector depends on how long the pandemic lasts and whether lifting the lockdown will see tourists willing to take the chance on traveling and how much international air traffic there is.
UBS also said the existence of a "cash cushion" inherited by the New Democracy government of Prime Minister Kyriakos Mitsotakis government from the previous ruling Radical Left SYRIZA would help.