Contraction to surpass 10% this year, banks say
Greek banks are again downwardly adjusting their forecasts regarding this year’s recession, following the new restrictions imposed on economic activity and the local lockdowns announced recently. If the Thessaloniki model spreads to most of the country, then the economy will shrink by 10% or more, they estimate.
The lenders’ economists are also concerned about 2021, as the prospect of a strong recovery fades, also due to the expected delays in the disbursement of the resources from the Next Generation EU fund.
National Bank of Greece has already drawn up a new forecast for a 9% contraction this year, against September’s estimate for a 7.5% slump, and this is also provided that the economy avoids a full lockdown.
NBG chief economist Nikos Magginas argues that “what will make the difference between a 9% drop and a 10% one will be whether part of Christmas turnover is saved, or if Athens joins Thessaloniki in a full lockdown.” He adds that 2021 will be a major challenge, with the 5% recovery projected being hard to achieve without the disbursement of 5.5 billion euros the government expects from Brussels.
Piraeus Bank chief economist Ilias Lekkos agrees about the 2021 challenge: “Any recovery rate below 3% will be a recessionary one. We need a rate above 3% to emerge from the recession zone. With a 5% rebound we could say we are covering some of the ground lost in 2020,” he says.
Alpha Bank’s Panayotis Kapopoulos expects a contraction of more than 10% for this year. However, the lender’s chief economic analyst argues that this is not as important as the 2021 recovery: “Expectations are vital, this must be the focus of attention,” he explains.
For Eurobank, the October revision of estimates puts this year’s contraction at 8.6% and the recovery in 2021 at 6.4%. Now its chief economist Tassos Anastasatos is worried the 10% rate will be exceeded, especially in the case of a total lockdown. He agrees that the crucial point is what happens next year, with the absorption of EU funds being essential.
