BoG governor Stournaras: Second lockdown to lead to deeper recession in 2020

A new wave of restrictive measures taken by the government to halt the second wave of the pandemic in November 7 is expected to have a bigger impact on the Greek economy, with economic activity projected to contract in the fourth quarter of the year, leading to a deeper recession for 2020 in comparison with a 7.9 pct contraction recorded in the first half of the year, Bank of Greece governor Yannis Stournaras said on Tuesday.

Addressing a conference organized by the American-Hellenic Chamber, the central banker said that despite the fact that the coronavirus pandemic was expected to significantly deteriorate some of the problems inherited by the debt crisis of the 2010, such as high public debt, high unemployment rate, large stock of non-performing loans and an investment gap, it also has some positive effects. For example, private deposits are up by 12 billion euros so far this year, credit expansion to larger enterprises is steadily rising – reflecting primarily the favorable monetary policy measures of the ECB and support measures by SSM and the measures taken by the Greek government through guarantees offered by a newly-set up Development Bank.

Stournaras noted that Greece was expected to receive 32 billion euros from a Recovery Fund in 2021-2016, of which 19.3 billion in subsidies and 12.7 billion in low-cost loans. He noted that a full, timely and efficient exploitation of these funds will contribute in increasing the level of real GDP by more than 2.0 pct annually, on average, in the 2021-2026 period.