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Greece’s state budget 2021 sees recession of 10.5% for 2020

The Greek economy is expected to contract by 10.5% in 2020 and to grow by 4.8% in 2021, according to provisions included in the new state budget tabled in Parliament by Finance Minister Christos Staikouras on Friday.

The 2021 budget envisages that the primary deficit will reach 7.2 pct of GDP this year (11.760 billion euros), falling to 3.9 pct of GDP (6.67 billion) in 2021, while the public debt is expected to reach 208.9 pct of GDP falling to 199.6 pct of GDP in 2021. The unemployment rate is projected to rise to 18.9 pct in 2020, from 17.3 pct in 2019 and to fall to 17.9 pct of the workforce in 2021.

According to the state budget, that government support measures for enterprises and workers will soar to 31.4 billion euros (23.9 billion this year and 7.5 billion 2021). These measures will have a positive impact on real GDP of around 7.0 percentage points in 2020, of which 3.3 percentage points in the fourth quarter of the year. Private investments are projected to jump by 23.2 pct in 2021 after falling by 14.3 pct this year, while harmonised inflation rate will return to positive ground (0.6 pct) in 2021 from -1.1 pct on average in 2020.

Tax revenues are projected to grow to 47.8 billion euros in 2021 after shrinking to 44.2 billion this year, while budget spending will remain at very high levels (67.2 billion euros) in 2021 from 69.3 billion this year.

A series of support measures announced by the government since the outbreak of the coronavirus pandemic in the country has put a break on this year’s economic recession, Finance ministry sources said on Friday.

The sources said that without these support measures economic recession could jump to 17.5 pct this year, while if the extension of these measures into 2021 was not envisaged, economic recovery next year would be much weaker.

Finance ministry sources said that of an expected GDP growth rate of 4.8 pct in 2021, 2.5 points would result from the support measures, and an additional 2 points from the implementation of the EU’s Recovery Fund.

The ministry sources said the V recovery scenario no longer exist either in Greece or the rest of Europe and that the expectation is for a recovery to begin in the second quarter of 2021.

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