Against the dramatic forecasts for fiscal figures to slump to levels reminiscent of the worst years of the debt crisis, there is also optimism within the government that things will actually turn out to be rather better. In any case Athens’ objective is to implement policy measures for sustained support of the companies hurt and to eventually bring the country out of lockdown and restart of the economy.
That requires strengthening growth for a swift recovery in 2021 and the containment of the fiscal derailment to a manageable degree. The country, government officials note, should remain able to access the market at a reasonable cost of borrowing.
The International Monetary Fund has forecast that the gross domestic product will decline by 10 percent this year, with a recovery of 5.1 percent in 2021. In the worst year of the debt crisis, 2011, the economy shrank 9.1 percent. The Foundation for Economic and Industrial Research (IOBE) has offered two scenarios, with economic contraction ranging from 5 to 9 percent, while the Parliamentary Budget Office has worked with three scenarios, ranging from 5.3 to 10.2 percent.
Finance Minister Christos Staikouras prefers to cite the estimates of the European Commission, which point to a recession from 5 to 10 percent.
However, another government source expects the contraction to be less than 5 percent in 2020, and a government official commented on the IMF forecasts of last Wednesday, wondering “When was the last time the IMF successful in its forecasts?” with reference to Greece’s economy.
The same government source told Kathimerini that Athens will announce a plan for the gradual lifting of measures after Easter, although “the problem is when the borders will reopen” – regarding tourism. In this field, hopes are focused on arrivals from Central and Eastern Europe – where the coronavirus crisis has been comparatively limited – and on extending the 2020 tourism season.
The source added that “the recovery will be rapid as the battle is being won,” on the grounds Greece has successfully tackled the health crisis, unlike other neighboring countries and rival tourism destinations. For the government, any spike in debt and deficit will be temporary.