OECD report: Greek economy to begin gradual recovery from 2021

Greece’s economy is set to contract by 10 pct in 2020 and to recover gradually in 2021, as ongoing virus outbreaks and restrictions weigh on services’ activity, exports, employment and investment. In 2022, the recovery is projected to accelerate, as the virus is better controlled with a vaccine having become more generally deployed, restrictions being eased globally and the government implementing new investment projects, the Organisation for Economic Cooperation and Development (OECD) said in its Economic Outlook report released on Tuesday.

The Paris-based organisation said it expected the Greek economy to contract by 10.1 pct this year, to grow by 0.9 pct in 2021 and by 6.6 pct in 2022. The unemployment rate is projected to reach 16.9 pct of the workforce in 2020 from 17.3 pct in 2019, rising to 17.8 pct in 2021 and falling to 17.2 pct in 2022. OECD said that controlling the pandemic sooner would hasten the recovery, reducing risks of rising insolvencies, non-performing loans and declining well-being. Extending and expanding support for households suffering income loss as the crisis continues would limit the drag on consumption and well-being, without locking workers into activities facing weak demand. Extending and better targeting liquidity support would help viable firms to stay in business. The draft 2021 budget prioritises cuts to personal income tax and social contribution rates, which will support longer-term employment growth. Strongly expanding effective training programmes would help to ensure that workers have the skills that the labour market will need after the crisis.

The OECD also envisages that the general government’s deficit will reach 9.4 pct of GDP this year, after a surplus of 1.5 pct in 2019, falling to 7.0 pct and 2.6 pct in 2021 and 2022, respectively. The general government’s debt is projected to reach 213.7 pct of GDP this year, falling to 207.6 pct in 2021 and 194.6 pct in 2022.