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Greece’s Economy Soars 16.4% Year-to-Year in Second Quarter

Greece economy
The building of the Academy in downtown Athens. Credit: homas-Wolf-Wikipedia-CC-BY-SA-3-0-de

Greece’s economy performed much better than expected in the second quarter of the year, with gross domestic product rising by 3.4 percent against the first three months of 2021 and jumping 16.4 percent from April-June 2020, provisional data published by the country’s statistics agency, ELSTAT, showed on Tuesday.

The data “reflect the impact on GDP of the Covid-19 pandemic and the restriction measures that were put into place,” ELSTAT said in its report.

According to ELSTAT’s revised data for the first quarter of 2021, GDP rose by 4.5 percent against the same period in 2020, driven by consumption, exports and investments.

The Minister of Finance Christos Staikouras stated that the strong recovery of the economy in Greece is confirmed, a recovery which is even stronger than the initial forecasts.

“This development, on the one hand, certifies the correctness and effectiveness of the government’s economic policy, and on the other hand, requires us to be vigilant and intensify our efforts,” Staikouras said.

He added that the ELSTAT data, combined with the positive course of all components of domestic demand, and especially investment and net exports, show that the course of GDP, in the whole of the current year, will be better than the estimates made.

Commentators say that Tuesday’s figures are expected to give the government some more leeway for tax cuts and other relief measures for struggling households and businesses.

Bank of Greece projects 4.2% economy growth in 2021

The Bank of Greece (BoG) said in June that economic growth will reach 4.2 percent this year, as it had also forecast in its previous report, with growth being particularly strong in the latter half of 2021.

The forecast is higher than the 3.6 percent that had been estimated by the International Monetary Fund (IMF).

The BoG’s monetary policy report for 2020-21 notes that the recovery of economic activity has already begun, but warned that “significant challenges” remain for the economy.

“The recovery is expected to gain momentum in the second half, driven by pent-up domestic demand, the launch of projects under the National Recovery Plan and an expected increase in tourism receipts relative to 2020,” the central bank said.

Growth in Greece to increase to 5.3 percent in 2022

It projected the country’s economic growth to pick up next year to 5.3 percent but then ease back to 3.9 percent in 2023.

“The increase in savings during the pandemic, either precautionary or forced due to the containment measures, and the release of pent-up demand are expected to support an increase in private consumption expenditure this year,” it said.

The revised forecast of the BoG for the primary balance of the general government budget points to a deficit of about 7.1% of gross domestic product.

However, this doesn’t take into account a range of other fiscal factors including interest on the debt, the cost of running cities and towns, state enterprises, social security and some military costs.

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