Greece's V-shaped recovery cut in half
Greece's economy is expected to rebound next year but the bounce is seen as being weaker than expected due to continuing uncertainty from the pandemic, according to the latest forecasts released by economists.
The country's anticipated V-shaped economic rebound is now looking more like an "L" tilted slightly on its side as ongoing risks indicate that growth may end up being minimal next year.
In a regional report, the European Bank for Reconstruction and Development (EBRD) cuts its forecast for Greece's economic expansion in 2021 to 4 percent from 6 percent previously.
"This partial recovery next year is subject to significant risk, especially linked with a possible continued disruption to tourism and other key sectors of the economy," the EBRD said in a report.
The tourism sector was decimated this year due to the coronavirus and the industry is expected to improve next year but will still trail behind tourism numbers booked in 2019. Experts in the field believe that tourists arrivals next year could reach 50 percent of levels seen in 2019, under a good case scenario.
For this year, EBRD also revised its forecast for a recession of 9.5 per cent, as opposed to an initial estimate for GDP contraction of 6 per cent.
"The strong fiscal performance and debt relief measures in recent years have provided ammunition for the implementation of a solid fiscal package in response to the Covid-19 pandemic, amounting to 8.4 per cent of GDP and including a range of measures to cushion the impact of the pandemic on businesses, households and vulnerable groups. Nevertheless, a deep recession for 2020 as a whole is unavoidable," it adds.
Dutch bank ABN AMRO also published its views on how it sees Greece performing next year. In a report, the lender estimates that next year's rebound will be even lower at 3.5 percent, with unemployment jumping up to 21 percent. Currently, Greece's jobless figures stand at 18.3 percent (June data)
The Finance Ministry is expected to update its economic outlook in coming days in a draft of the 2021 budget being sent to the European Commission.
Alongside developments regarding the health crisis, the pace at which the country takes advantage of money coming from the EU's Recovery Fund is believed to play a large role in how well the country will weather the next period of the pandemic.
However, there are concerns that red tape may well hold up payment of Greece's share of the fund, estimated at 33 billion euros, leaving businesses and households heavily exposed to the downturn.