The Greek economy is expected to contract by 4.7 pct this year as a result of the measures taken to halt the spread of the coronavirus pandemic, the country's Finance Ministry said in an updated report submitted to the European Commission for the 2020 European Semester.
According to the report, the economy will suffer a triple shock: one temporary but very strong shock in supply, as the lockdown reduces production of goods and services, along with incomes of producers and labour force; the second will be a strong shock in demand as a lockdown reduces consumption and the third is the shock of uncertainty, since both the duration and intensity of the crisis are unknown.
The forecast for a 4.7 pct economic recession this year is based on the assumption that a healthcare crisis will gradually recede after the first half of 2020, with the economic impact expected to be visible in the second quarter of the year.
The unemployment rate is projected to rise from 17.3 pct in 2019 to 19.9 pct in 2020 and to fall to 16.4 pct in 2021.
The inflation rate is expected to return to 2019 levels (harmonized consumer price index) to -0.3 pct in 2020, rebounding to 0.6 pct in 2021.
At the same time, private consumption is expected to fall by 4.1 pct this year reflecting losses of income and a suspension of consumption spending due to measures to restrict social contacts. Consumption is expected to grow by 4.2 pct in 2021. On the other hand, public consumption is expected to grow by 1.0 pct due to increased state spending.
Private investments (gross fixed capital formation) are expected to fall by 4.6 pct and to jump by 15.3 pct in 2021.
The state budget's primary surplus is expected to significantly fall short of the 3.5 pct of GDP aim for 2020.
Finally, exports of goods and services are expected to drop by 19.2 pct this year, while imports are projected to fall by 14.2 pct.
Both exports and imports are expected to grow by 19.2 pct and 15.6 pct, respectively in 2021.
The economy is projected to recover with a 5.1 pct growth rate in 2021.