The coronavirus pandemic, which has negatively affected Greece’s tourism and hospitality industries, is already widening the country’s budget deficit and slowly pushing it back into recession.
On Wednesday, Finance Minister Christos Staikouras announced that Greece is expected to suffer a shrinkage in its gross domestic product by fully eight percent in 2020.
A 16 percent downturn is also expected for the country during the second quarter, which covers the months of April to the end of June. These statistics indicate a period of negative economic growth and raise the possibility of a potential recession.
After years of financial crisis, Greece had originally expected its economy to grow by a healthy 2.8 percent, with the country’s recovery having finally gained real traction.
The Finance Ministry, however, reported on Thursday that the primary deficit figure for the state budget stood at 4.84 billion euros ($5.41 billion) in the first five months this year. This also accounts for the balance before debt servicing costs.
In the first four months, the corresponding number for the budget was reported to have been 1.52 billion euros ($1.7 billion).
Greece has continued to deliver primary budget surpluses for the past five years, as per their commitment to EU bailout leaders. Despite this, creditors have thankfully agreed to relax those conditions for 2020 due to the serious and unavoidable impact of the coronavirus pandemic.
As tourism has for years been one of the strongest sectors within Greece’s economy, projections for the country’s profitability are dependent on how well this industry performs this summer.
It is noted that the state budget calculations do not include budgets for local government and social security.