ECONOMY

Brussels sees Greek recession at 8-9 pct this year

brussels-sees-greek-recession-at-8-9-pct-this-year

The European Union estimates that the Greek economy will contract by 8 to 9 percent this year due to the coronavirus pandemic, much higher than the government’s projections.

Officials in Brussels revealed that forecast on Wednesday, during a conference call with the finance ministers of the Greek government regarding the assessment of the Greek economy.

On Tuesday Paolo Gentiloni, the European commissioner for economic and financial affairs, had told the Eurogroup teleconference that the recession in Greece would come to 10 percent in 2020.

Finance Minister Christos Staikouras had recently argued that gross domestic product would contract by 3-4 percent this year, although yesterday he spoke in Parliament of a “very deep recession.” 

The government has based its rather more favorable forecast on the fact that Greek GDP is mainly based on consumption, which has not suffered as heavy a blow as have investments; there is also the fact that – tourism aside – Greece’s economy does not rely to a great extent on exports.

What the calculations of both Athens and Brussels boil down to is that the country will record a primary deficit after several years, as the state will spend more than what it will collect, without even factoring in interest payments.

According to Greek sources, that deficit is projected to be small (albeit slightly higher than the estimates of the European Union) and manageable, in the sense that next year the country could return to a primary surplus.

On Wednesday Greece’s creditors spoke of the goal of achieving next year’s fiscal target, but without discussing what that target would be. Both sides agreed that this issue should not be debated at this stage, in the middle of the health crisis.

The discussion on the protection of borrowers’ main residences was also inconclusive.

The government wants to see the protection of borrowers’ homes from auction to be extended until the end of this year, from the original expiry date of April 30. Government officials argue that you cannot have people left without a home in the current climate.