BoG: Economic activity in Greece is expected to contract by 10% in 2020

Economic activity in Greece is expected to contract by 10 percent in 2020, before starting to recover in 2021 and 2022, the Bank of Greece (BoG) said in its Interim Report on Monetary Policy 2020, submitted to Greek Parliament President Constantine Tassoulas on Monday.

In its report, BOG noted that the second wave of the pandemic heightened uncertainty and delayed economic recovery.
Under its baseline scenario, it said, “economic activity is expected to contract by 10 pct in 2020. A recovery is anticipated in 2021 and 2022, with GDP growing by 4.2 pct and 4.8 pct, respectively, driven by a significant pick-up in both domestic and external demand.”

The report also underlined the “timely and efficient utilization of Next Generation EU (NGEU) recovery funds totalling 32 billion in constant 2018 prices for Greece” and said they will “need to be targeted at growth-enhancing high value added projects in the areas of energy saving, the transition to green energy, the digital transformation of the public and the private sector, as well as at strengthening the healthcare sector” and education.

In the medium term, a return to positive growth will require the continuation of structural reforms and an increase in investment, it said.

According to Tassoulas, the BOG report will be discussed at the relevant parliamentary committee as of the new year, in the presence of BOG Governor Yannis Stournaras.