IMF: Greece will be the worst hit economy in Europe with 10% recession

The International Monetary Fund forecasts a nightmarish deep recession for Greece in 2020, as a result of the coronavirus pandemic. The IMF expects the Greek economy to shrink by 10% of the GDP and unemployment to jump to 22.3%

In its World Economic Outlook “The Great Lockdown: Worst Economic Downturn Since the Great Depression” on the devastating effects on the global eocnomies, the IMF projects that Greece will be the country among the eurozone members to be mostly hit. Average recession in Europe -7.5%.

Reason for the deep recession is that Greece heavily depends on tourism and travel sector.

Two days ago, Greek Finance Minister Christos Staikouras said that the pandemic crisis costs the Greek GDP 2.5 points every month and estimated that recession may be between 5%-10% due to tourism losses. He stressed that the large stake of tourism in the Greek economy makes it more vulnerable to the crisis.

It should be noted that the coronavirus outbreak hit Greece shortly before the start of the tourism season and is expected to continue through to September in the best case scenario. IMF Chief Economist Gita Gopinath said there was still considerable uncertainty with regard to the Covid-19 pandemic, which is currently expected to weaken towards the end of 2020.

The current account deficit is expected to expand to 6.5% in 2020 (vs 2.1% in 2019).

Unemployment rate is expected to jump back up 22.3%, that is on the same rate as in July 2016.

Chart ELSTAT: Unemployment October 2004 – 2019

#COVIDー19 @IMFNews projection for 2020 in Europe

👪Unemployment

1 🇬🇷 Greece 22.3%
2 🇪🇸 Spain 20.8%
3 🇹🇷 Turkey 17.2%
4 🇵🇹 Portugal 13.9%
5 🇷🇸 Serbia 13.4%
6 🇳🇴Norway 13%
7 🇮🇹 Italy 12.7%
8 🇮🇪 Ireland 12.1%
9 🇭🇷 Croatia 11.5%
10 🇫🇷 France 10.4%

📈https://t.co/0pUbz3xrmI pic.twitter.com/FjD5jomf13

— Jo Di 🏳️‍🌈 (@jodigraphics15) April 14, 2020

The forecast also see only a 5.1% increase for 2021. This means that half of the losses in 2020 will not be recovered the next year.

Prior to the pandemic, the IMF forecast a growth rate of 2.2 percent this year, climbing to 2.8 percent in 2021.

According to analysts, the IMF forecast implies that Greece may need up to 4 years to recover,

Prior to the pandemic, the IMF forecast a growth rate of 2.2% this year, climbing to 2.8% in 2021.

The report comes on the heels of similar ominous assessments by international ratings agencies that nationals economies, including Greece’s previously recovering economy, will be dealt a heavy blow by the Covid-19 crisis.

Goldman Sachs recently put the forecast for Greek economic implosion at 9% for 2020.

The IMF warns that the ongoing pandemic has emerged as the most devastating economic crisis since the Great Depression in the 1930s.

The IMF notes that assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, we project global growth in 2021 to rebound to 5.8 percent.

This recovery in 2021 is only partial as the level of economic activity is projected to remain below the level we had projected for 2021, before the virus hit. The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the economies of Japan and Germany, combined.