Econ­omy can take a sec­ond wave

New pro­jec­tions put the year’s re­ces­sion at 7.5-8%, af­ter a 15-16% con­trac­tion in April-June pe­riod

Kathimerini English - - Front Page - EIRINI CHRYSOLORA

Greece’s eco­nomic re­ces­sion in the sec­ond quar­ter will be deep but within fore­casts, at 15-16% year-on-year, ac­cord­ing to Fi­nance Min­is­ter Chris­tos Staik­ouras as well as the Na­tional Bank of Greece. There­fore, the econ­omy is pro­jected to shrink by 7.5-8% over the whole year, al­though prob­lems will be greater for cer­tain fi­nan­cial sec­tors, such as food ser­vice, and re­gions, such as the is­lands, due to an un­even re­cov­ery.

In the April-June quar­ter, gross do­mes­tic prod­uct will shrink by 16%, Staik­ouras told Thema FM yes­ter­day, adding that this rate has been in­cor­po­rated into the gov­ern­ment fore­cast re­gard­ing an 8% con­trac­tion this year.

NBG es­ti­mates that in April, when the coun­try was in con­stant lock­down for the whole month due to the coro­n­avirus, the con­trac­tion amounted to 21% year-on-year, while in May, when com­pa­nies grad­u­ally re­sumed op­er­a­tions, it slowed to 10%. Then, in the first two weeks of June – which saw the lim­ited in­cor­po­ra­tion of in­dexes re­lated to tourism en­ter­prises – the con­trac­tion slowed fur­ther to just 4.7%, ac­cord­ing to the bank’s anal­y­sis team led by chief economist Nikos Mag­gi­nas.

The NBG anal­y­sis also cal­cu­lated that the econ­omy shrank 15% in the sec­ond quar­ter, for a to­tal eco­nomic con­trac­tion of 7% over the year’s first half. With pro­jec­tions for a drop of 11.6% in Q3 and 2.4% in Q4, NBG ex­pects the econ­omy to post a fall of 7.5% for the whole of 2020.

While the macroe­co­nomic data have re­mained within fore­casts, there is con­cern about spe­cific sec­tors. Staik­ouras ac­knowl­edged yes­ter­day there is a prob­lem in food ser­vice and said, “We are here to re­spond with more tar­geted ac­tion,” while on tourism he stated that, “on the is­lands, it does not ex­ist or has just started tak­ing its first steps,” adding, “We are here to see to ev­ery­thing.” He spoke of a pos­si­ble ex­pan­sion of the Syn-Er­ga­sia la­bor sub­sidy pro­gram to more sec­tors and is­lands, and the pos­si­bil­ity of fur­ther ex­pand­ing the sub­si­dized do­mes­tic tourism pro­gram.

The min­is­ter also said the coun­try’s cash re­serves have risen to 37.5 bil­lion eu­ros, from €36.5 bil­lion be­fore the pan­demic, which would suf­fice for Greece to tackle an­other coro­n­avirus wave.

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