Commission Revises Greece Growth Forecast Upward

The European Commission revised upward on Wednesday its forecast for Greek GDP growth to 4.1 percent in 2021 and 6 percent in 2022 making a modestly higher estimate compared to its February predictions of 3.5 percent in 2021 and 5 percent in 2022.

Employment support measures are expected to continue to facilitate the return of workers whose contracts have been suspended and to help keep the jobless rate at 16.3 percent in 2021 compared to 2020. However, job creation will recover more slowly, the Commission said, predicting a small reduction in unemployment in 2022 to 16.1 percent.

Speaking in Brussels on Wednesday, European Commissioner for Economy Paolo Gentiloni said the Greek economy is expected to grow at a rate of 4.1 percent in 2021 and 6 percent in 2022, which he said is noteworthy for a country relying in large part on hard-hit tourism. 

He described Greece’s prospects as being in the right direction despite the impact of the Covid-19 pandemic on tourism, one of the country’s key revenue-generators.

The report’s analysts go on to note that the pandemic and the subsequent containment measures pushed the Greek economy into a deep recession of -8.2 percent in 2020.

“Tourism and the services sector in general have been hit hard. However, the timely policy measures taken by the Greek government managed to mitigate the recession by supporting employment and corporate liquidity,” said the report.

“Favorable fiscal policy, combined with strong stimulus from the recovery and resilience plan, is expected to help boost the economy in the future.” 

Looking ahead the Commission predicts an increase in private consumption mostly in 2022 as vaccination rollouts continue and measures are lifted.

At the same time, the re-opening of tourism is expected to boost export activity.

Meanwhile, investments to be implemented under the Recovery Fund, are set to stimulate economic activity in the second half of 2021.

The Commission forecast stresses however that uncertainty is still high, particularly with regard to tourism and travel restrictions. 

Other challenges ahead include business solvency issues once support employment measures expire. Labor market developments depend on the end of the support schemes.

As a result of the coronavirus crisis, Greece’s public debt is expected to rise to 209 percent of GDP in 2021, set to decline to 202 percent of GDP in 2022.