The lockdown due to the coronavirus in the second quarter has led to the biggest recession in Greece’s post-war history as GDP fell by 15.2% – equivalent to around 8 billion euros – compared to the same period last year, mainly due to the sharp decline in tourism, according to the Hellenic Statistical Authority (ELSTAT).
The overall decline was in line with the expectations of the government and analysts, although in some cases the decline in exports of services – mainly tourism – reached 50% and turned out to be worse than expected.
Nonetheless, the government’s financial staff remains hopeful that its forecast of an overall recession of around 8% in 2020 will not be exceeded and that the economy’s potential turnaround in 2021 will not be compromised.
However, they remain cautious, as are analysts, who stress the high uncertainty over the economy’s course, especially in the third quarter, during which tourism plays a dominant role.
Greece’s second-quarter contraction was slightly above the average of the eurozone (15%) and the European Union (14.4%), based on Eurostat’s interim flash estimates.
However, it was lower than in other southern European countries with correspondingly strong tourism industries, such as Spain (-22.1%), Portugal (-16.5%), Italy (-17.3%) and France (-19%).
“This is a large-scale recession, but not different from what we expected and compared to the European Union at about the same levels,” said Tassos Anastasatos, chief economist at Eurobank, predicting, however, that the recession “will continue in the third quarter, so it is too early to say whether we will avoid the double-digit rate overall in 2020.”
According to reports, the government’s Stability Program, which it submitted to the EU at the end of April, was based on the assumption of an economic contraction of 2.6% in the first quarter and 15.7% in the second.