The major problem for the global community in this period is what the spread of the coronavirus will generate.
Greek society is facing this huge challenge with anxiety and caution, and the government and scientific experts are doing everything possible to minimize the human, social and economic costs.
With methodic action and foresight, and with absolute unity and cooperation on the part of the other competent ministries, the Finance Ministry has already taken some initiatives, and more will follow on a national and European level so as both to curb the inevitably considerable consequences of the coronavirus as regards the country’s economic expansion, public finances and the real economy, and to retain social cohesion.
From the outset there has been full support for the healthcare system, with extraordinary expenditure where required regarding salary costs, new staff hirings, intensive care unit equipment, medicines and healthcare materials, cleaning and security costs, transport and analysis of samples and anything else required.
We have provided for facilitating access to work, and especially for working parents with children aged up to 15 with the right to a special leave so that they can safely respond to the closure of all kindergartens and schools.
We have provided for the suspension of tax and social security contribution payments by enterprises that have shut down following a government decision.
We have created a monitoring mechanism to intervene in a timely, targeted and efficient manner in the economic sectors and the regions where a considerable decline in financial activity is observed.
We are activating an integrated system of support for salary workers due to the suspension of salary payments by enterprises that have had to temporarily cease operations that will include economic support, the maintenance of jobs, the securing of social security rights and remote skill-building training.
We are about to provide liquidity to corporations that have not been forced to close by government decision but have sustained a serious financial blow.
We are also demanding some additional fiscal space for 2020 through the reduction of the primary surplus target and the exemption of specific expenditure from its calculation.
We are operating with wisdom and unity, with foresight and responsibility, cool-headedness and self-discipline.
Although our energy is devoted to the above, I must still comment briefly on the course of the country’s gross domestic product during the last quarter of 2019, as those data and their momentum, despite the entirely different landscape currently being created for this year, have their own value and we will have a proper look at them once we have overcome the high obstacles raised in front of us – hopefully soon.
On a primary analysis level, if that performance which the Hellenic Statistical Authority (ELSTAT) has announced as provisional is correct, then the growth rate of the economy was 1.9 percent in 2019, within the budget target. This is actually the first time in five years that the national growth target has been achieved.
Based on these figures, the Greek economy achieved a growth rate of 1.6 percent in the second half of 2019, thereby exceeding the average performance of both the eurozone states (1.1 percent) and of the European Union as a whole (1.2 percent).
On a secondary analysis level we see that, apart from the large increase in state consumption in the first half of 2019 – found exclusively in the second quarter due to the local, European and national elections – all other GDP components recorded greater growth rates in the second half of last year than in the first! Investments posted a yearly rise of 8.4 percent in the second half against just 0.9 percent in the first half; private consumption grew 1.2 percent in H2 against 0.4 percent in H1 and real exports of goods expanded 5 percent in H2 against 4.8 percent in H1.
On a quarterly basis we also see a positive and promising course of GDP components, except for product stock that is typically followed by an increase in the following periods, which is set to boost the economy when the situation reverts to normality.
Remember that since ELSTAT does not have a precise methodology for the assessment of product stock, its level is calculated by the difference between the GDP based on expenditure and the GDP based on output. The actual determination of stock is only conducted through the annual national accounts.
In Q4 last year private consumption rose 1.8 percent – the biggest increase since 2007; investment soared 14.4 percent – the greatest increase since 2006; and the external trade balance remained positive as exports may have shrunk but imports declined further.
In structural terms, given all of the above, the factors that determine growth showed a more positive picture in the second half of 2019 as reflected in the growth rate of the real GDP, signaling the prospect of stability.
In conclusion, this is the reality as far as the country’s GDP is concerned for the fourth quarter and the second half of 2019 – the truth that reflects the momentum in the economy.
That is a momentum which has started and ought to be maintained in order to achieve, in the medium and long term, high and sustainable growth rates – a momentum which we should build on once we have overcome the significant social and economic consequences from the spread of the coronavirus.
I am optimistic that our efforts, in spite of the huge difficulties, will bear fruit in the end.
* Christos Staikouras is the Greek minister of finance.