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Greece Announces Whopping 6.1% Growth Forecast for 2021

Greece economic growth
The Academy in downtown Athens, Greece. Credit: Thomas Wolf, CC-BY-SA-3-0/Wikipedia

Greece announced that its economic growth will reach an astounding 6.1 percent in 2021, according to the provisions of the draft budget plan brought before Parliament on Monday.

More specifically, the country’s GDP is projected to grow by 6.1 percent this year and 4.5 percent in 2022, after contracting by 8.2 percent in 2020 due to the pandemic.

The Greek economy is expected to recover all losses suffered in 2020 in the fourth quarter of 2022.

Private consumption is projected to rise 2.9 percent this year, after falling by 5.2 percent in 2020 and to grow by 2.9 percent in 2022. Public consumption is expected to rise by 4.1 percent in 2021 and to fall by 2.8 percent in 2022, after rising by 2.7 percent in 2020, as the government will gradually lift support measures.

Growth in economy to be boosted by investments

Private investments, which fell 0.6 percent last year, are projected to jump 11.1 percent this year and to soar by 23.4 percent in 2022 helped by the inflow of funds from the Recovery Fund.

Exports of goods and services fell 21.7 percent in 2020, but are expected to rise 14 percent this year and 11.1 percent in 2022. Imports are projected to rise 6.6 percent this year and 8.9 percent in 2022, after falling by 6.8 percent in 2020. Unemployment is projected to fall to 16 percent this year and to 14.3 percent of the workforce in 2022, from 16.3 percent in 2020.

The draft budget plan noted that the National Recovery and Resilience Plan is expected to add 2.9 percentage points of GDP in 2022, while a gradual return to normalcy, based on the vaccination program, will offer additional economic benefits.

A return to normalcy is expected to facilitate the stabilization of fiscal data and support a further recovery of the tourism sector, with travel receipts expected to rise by 60 percent compared with 2021.

Second upward revision for Greece’s economic growth

The 6.1 percent growth forecast is even higher than the projection by Greek PM Kyriakos Mitsotakis who stated in September that Greece’s economy will grow 5.9 percent during 2021.

The faster growth gave the Prime Minister the fiscal space to announce at the Thessaloniki International Fair a range of tax reductions and spending targeted at young people, small businesses and the middle class.

Small businesses are encouraged to merge with tax breaks and new entrants in the job market will be subsidized. There was even something for 15- to 17-year-olds who will be vaccinated, in the form of 50 gigabytes of free data for their smartphones.

Greece advancing reforms, European Commission says

In late September, the European Commission (EC) praised Greece for advancing reforms and meeting commitments agreed to as part of its post-bailout program despite the challenging circumstances caused by the Covid-19 pandemic and noted that the economy was demonstrating an “earlier-than-expected recovery.”

In its 11th enhanced surveillance report, the Commission confirmed that real GDP increased by 4.5 percent and 3.4 percent on a quarter-on-quarter basis in the first two quarters of the year after an 8.2 percent slump in 2020.

The report attributes the upswing to investments and accumulation of inventories. It goes on to forecast a 4.3 percent increase in GDP in 2021 and a 6.0 percent rise in 2022, taking into account the investment dynamic driven by the recovery and resilience plan.

Meanwhile, the bounce generated by tourism, the Commission said, helped keep unemployment down to 15.9 percent in Q2 2021 compared to 17.1 percent in the same quarter last year.

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