Development Minister Adonis Georgiadis put it bluntly: “There’s no more money… If the pandemic re-emerges in winter, we are finished financially.”
Optimism is good and often useful, especially when it comes to highlighting encouraging developments, but so is maturity, a sense of responsibility and pragmatism. The truth needs to be faced and over-the-top expectations dampened.
The coming fall is very likely to be a difficult period for Greece. Sure, there are some signs of a recovery in economic activity, but the long-term prospects of the Greek economy are anything but great.
The challenges lying ahead in the post-Covid era – if indeed we are entering such a phase, and it’s a very big if – are significant. We are looking at massive public and private debt and twin deficits, while the end of the support from the European Central Bank will likely lead to a rise in borrowing rates. Banks, moreover, which are the key support pillars of the economy, have to tackle a mountain of nonperforming loans.
Before we get there, directly before us lies the challenge of tourism – we are expecting much in that area, though it is not at all certain much will come. For reasons that are beyond us – though we do have a share of responsibility – and have to do with the course of the pandemic and the new variants, revenues may fall short of targets and expectations.
We are also relying on the EU recovery plan and on the fast and efficient absorption of European resources, as well as on increased domestic demand. To what extent all this will pan out and whether it will be enough to provide the necessary boost, remains to be seen. Given the vagaries of the Greek economy, assessments are based more on expectation than certainty.
Meanwhile, when the state’s financial support measures for businesses and workers harmed by the pandemic come to an end, thousands of businesses may be forced to close, taking even more thousands of jobs down with them.
Despite progress with certain initiatives, investments in certain areas and the surprisingly rapid transition to more digitized state services, no one can say that the Greek economy suddenly gained a competitive edge. An objective reading of reality leaves little room for complacency. Yes, there are a lot of challenges ahead and, yes, the fall will be tough.