The European Commission revised its forecasts for Greek economic growth upwards on Wednesday, projecting growth rates of 4.1 pct in 2021 and 6.0 pct in 2022. The EU’s executive body, in a report in its spring economic forecasts, said that the coronavirus pandemic and all related restrictive measures led the Greek economy to a deep recession in 2020 (-8.2%), “with tourism and the services sector particularly hit. However, the timely implementation of support measures managed to moderate the extend of the economic contraction, supporting employment and liquidity of enterprises. A supportive fiscal policy, combined with a strong boost expected from the recovery and resilience plan, are expected to contribute in the restart of the economy,” the Commission said in the report.
The support measures managed to avert large-scale layoffs of workers, keeping unemployment at 16.3 pct of the workforce, while employment fell because of lower hirings in the tourism sector. The report noted that progress in a vaccination drive in Greece will allow a gradual easing of restrictive measures, contributing to higher private consumption, particularly in 2022, while in the second half of 2021 an increase in investments is expected due to the start of projects in the framework of the national recovery plan. Greek GDP is expected to grow by 4.1 pct this year and by 6.0 pct in 2022.
The unemployment rate is projected to remain at 16.3 pct of the workforce this year and to ease slightly to 16.1 pct in 2022, while the inflation rate is expected to remain slighty negative this year and to recover in 2022.
The country’s fiscal deficit is projected to rise to 10 pct of GDP this year, from 9.7 pct in 2020, but the nominal deficit is projected to drop to 3.2 pct of GDP in 2022. The country’s public debt is expected to rise to 209 pct of GDP this year and to ease to 202 pct of GDP in 2022.
European Commissioner for Economy Paolo Gentiloni, in a press conference in Brussels on Wednesday, said that the Greek economy’s growth prospects are good, despite the effects of the pandemic in important sectors, such as tourism.
Specifically, Gentiloni stated that the Greek economy is expected to grow at a rate of 4.1 pct in 2021 and 6 pt in 2022, noting that this is important for a country that is especially impacted by the effects of the difficulties internationally in the field of tourism.
He said that he hopes that this impact on the tourism sector will be significantly reduced in the next period, with a much better tourist season, but it will not be completely eliminated.
“In this respect, the Commission’s forecasts for the Greek economy are good, although a little lower than those of the Greek authorities, due to the great weight we gave to the effects of the restrictions against the pandemic in the first quarter of 2021,” he added.
Finally, the European Commissioner stressed that the general escape clause of the Stability and Growth Pact also applies to the objectives of the Greek programme and added that a significant period of activity is beginning for Greece and the recovery of its economy.