In an overall positive report regarding the prospects for the Greek economy, the Organization for Economic Cooperation and Development (OECD) reported on Tuesday that although the economy will contract by 10 percent in 2020 due to the ramifications of the coronavirus, it is set to recover gradually in 2021.
The OECD’s Economic Outlook report stated that ongoing virus outbreaks and restrictions will continue to weigh on business activity, including exports, overall employment and investment in the economy, in the near future.
In 2022, however, Greece’s recovery is projected to accelerate, as the virus is better controlled with a vaccine in general use by the public, restrictions being eased globally and the government implementing new investment projects.
The Paris-based organization said it expected the Greek economy to contract by 10.1 percent this year, to grow by 0.9 percent in 2021 and by an eye-popping 6.6 percent in 2022.
The unemployment rate is projected to reach 16.9 percent of the workforce in 2020, which is actually down from 17.3 percent in 2019, rising again to 17.8 percent in 2021 and falling to 17.2 percent in 2022.
The OECD said that controlling the pandemic sooner rather than later would hasten the desperately-needed recovery, reducing the risks of the rising number of insolvencies and non-performing loans as well as declining standards of living.
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, according to the report.
Extending and better targeting liquidity support would also help viable firms to stay in business, it said. The draft budget for 2021 prioritizes cuts to personal income tax and social contribution rates, which will support longer-term employment growth as well.
Greatly expanding effective training programs would help to ensure that workers have the skills that the labor market will need after the crisis, according to the report.
The OECD also envisages that the general government’s deficit will reach 9.4 percent of GDP this year, after a surplus of 1.5 percent in 2019, falling to 7.0 percent and 2.6 percent in 2021 and 2022, respectively. The general government’s debt is projected to reach 213.7 percent of GDP this year, falling to 207.6 percent in 2021 and 194.6 percent in 2022.