Greece counts on EU support for restructuring economy

Greece counts on EU support for restructuring economy

Greece needs to make the most of the European Union resources it will receive to contain the blow of the novel coronavirus pandemic on its economy not by handing out benefits but by restructuring its economy, government officials and economists agree.

As part of its support to member states, the EU has pledged what Athens calculates at almost 32 billion euros in grants and loans, as the European Commission projects a 9.7 percent annual economic contraction for Greece this year.

The Greek economy contracted by 0.9 percent on an annual basis in the first quarter of the year, the Hellenic Statistical Authority announced last week, against a 3.6 percent contraction across the eurozone.

"We are doing well in containing not only the coronavirus but also its impact on the economy, and foreign firms are beginning to acknowledge that revising their forecasts about a downturn that would be worse than in other countries," Prime Minister Kyriakos Mitsotakis told Parliament on Friday.

However, the figures will get much worse once the pandemic's impact on the economy is felt later in the year, said Antonis Zairis, vice president of the Association of Business and Retail Sales of Greece (SELPE) and assistant professor at the Neapolis Pafos University. He told Xinhua that the impact will be greater in the final four months of the year, with a deeper recession then.

He shared with Xinhua SELPE's forecasts for 2020 that point to a 14 percent annual reduction in retail commerce turnover, i.e. a loss of 7 billion euros, and a 10 percent yearly drop in wholesale commerce, amounting to 9 billion euros.

"The coronavirus may have hurt the growth course of the economy, but with the help of EU resources the country will return to its recovery path," Mitsotakis said in Parliament. "This government will not waste that money; it will invest it so as to finance the restructuring of the economy," he said, stressing that the EU support is not meant to go to handouts but to boost growth.

"We have a duty to invest these resources smartly," Alexis Patelis, the prime minister's chief financial advisor, told an economic forum here on Thursday, promising a "serious and decisive approach." He added that the government will "consult the experts" during the summer, referring to the advisory committee set up earlier this year and led by British-Cypriot Nobel laureate economist Christopher Pissarides.

Patelis also noted that the government's plan for the use of EU resources will be ready to be implemented in October.

Speaking at the same forum, Pissarides avoided commenting on the proposals the committee will make but said one of the sectors worth investing in is renewable energy sources.

Zairis stressed that the significance of the proper distribution of those 32 billion euros towards "a change to the composition and structure of gross domestic product (GDP)." He underscored the significance of circular economy and green investments, with the aim of making Greek enterprises more competitive by channeling resources to the sectors most needing them.

"We also need to modify consumption that accounts for the bulk of the Greek GDP, so that it concerns local production," said Zairis.

He proposed regular updates to the public by the Pissarides-led committee or by the government about the progress of the utilization and absorption of EU funds, just as the government regularly informed the public about the course of the battle against the pandemic throughout the spring.

Meanwhile, Greece pins some of its hopes on tourism. The European Commission has based its recession forecast for Greece on the assumption that tourism will suffer particularly this year in a country that relies heavily on this industry. However, Mitsotakis stated last week that Athens is hoping to capitalize on its positive image in tackling the pandemic by increasing the country's share in the global tourism market that is certain to shrink this year.

On June 15, Greece is preparing to reopen its biggest airports in Athens and Thessaloniki to tourists from a host of countries, including major tourism markets Germany and China, in the hope that tourism takings will contain this year's expected revenue losses.


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