The measures in the 2020 budget will increase the country’s gross domestic product by one percentage point, confirming its growth orientation, an analysis published by National Bank of Greece on Tuesday argued. However, that is on the condition that the international climate does not deteriorate, it added.
The Economic Analysis Department of NBG focused on next year’s tax breaks that add up to 1.2 billion euros, half of which concerns corporate taxation. “International experience has shown that the fiscal impact from the application of measures targeting the supply side, encouraging business decisions on output, investments and hirings, is usually greater (by about 30 percent) compared to interventions that only support demand,” read the report.
Still, the analysts concede that some uncertainty surrounds the positive effect of those measures, as it will depend on business decisions that could change if conditions take a turn for the worse. The budget relies on assumptions of a mild improvement in conditions in the European economy, the maintenance of domestic economic sentiment at the same level as in the second half of 2019, and the extension of the mildly positive trend in liquidity conditions.