Greece: COVID-19 Pandemic: Greece won the battle of health and it is the turn of the economy to recover

Greece emerged from a ten-year economic crisis and 2019 was a year of recovery. 2020 was expected to be better with a 2.2% growth forecast from the IMF. However, the pandemic overturned all the positive predictions that had been made. Government took timely measures to deal with the pandemic. The general lock-down was something new but citizens complied with the restrictive measures and adapted to the conditions. Initially Greece was one of the few countries that successfully faced the pandemic. 

The third quarter was difficult as the gradual lifting of the restrictive measures was necessary and it is time to deal with the economic consequences. The end of lockdown period does not mean the return to the financial levels of 2019.The state budget was already burdened to support public and private sector workers. Tourism, which is one of the strongest parts of the Greek economy, has been hit hard. Forecasts for 2020 are ominous with the recession estimated at 8-10%. The IMF and EC forecasts show the 2020 unemployment rate rising to 22 % and 19.9 %, respectively, then decreasing in 2021 to 19 % and 16.8 %. This is an optimistic scenario that is based on the following assumptions: first the COVID-19 pandemic will fade in the second half of 2020, with a gradual lifting of containment measures, and second there will not be a second wave. Τhis was not confirmed, while the pandemic continues and the number of cases is now high. The need to develop digital policy and digital governance was urgent. Government created digital platforms that automate the transactions processes and reduce bureaucracy. 

In the field of economics, the European Union agreement on member state funding was positive. Greece will receive 32 billion, of which 22.5 as a grant and the rest with a long-term repayment loan. The Greek government has announced a plan that includes reductions in taxes and insurance contributions, the abolition of real estate taxes on 26 islands and the subsidization of new jobs by financing their contributions. It is also adopted the measure of over depreciation at 200% for both digital and green fixed capital investments for three years, 2021-2023. It is an indirect liquidity injection that reduces corporate tax. Prime minister has also announced new bills and reforms to the Bankruptcy Code, debt settlement and arrangement of “red” loans. 

The interest rate on ten-year bonds issued by Greece closed at 1.23%, while the interest rate on 12-month treasury bills was zero. It is encouraging that the country can raise funds needed for liquidity at low interest rates. The country with the use of EU funding and cheap lending has the weapons to deal with the financial crisis created by the pandemic. It is important that these financial resources be channeled to the market to strengthen the sectors most affected, such as tourism and manufacturing. Unfortunately, 2020 is a year of recession, but economic policies can reverse the climate for 2021.

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