According to ELSTAT quarterly national reports, in 2019 the growth of the Greek economy was documented and the increase in GDP amounted to 1.9%. The report also shows that net export has again become Greece’s economy main driving force, especially in the first three quarters of 2019. Despite a slight slowdown, export growth was robust, including tourism. Unemployment fell to 16.6% in October 2019 compared to 18.5% in 2018, although this figure still remains the highest in the EU.
European Commissioner for Economy Paolo Gentiloni has penciled in growth of 2.4 % for Greece in 2020, as reveals The European Commission Winter Economic Forecast, published on 13.02.2020. According to the EU’s primary executive body, private consumption and the investment will be the driving forces for the national economic growth in 2020. This is due to the fact that the confidence of business and consumers is currently at the pre-crisis level, while the disposable income continues to grow. As regards the export, experts underscore that it is set to continue on a path of steady, moderate growth and its pace can only decrease if growth in the countries of export destination slows down.
However, it is quite hard to make any predictions about the Greek development in 2020 at the moment. Analysts suggest that it is certain Greece will return to recession due to the coronavirus pandemic’s impact, especially in the first half of the year. More precisely, the pandemic puts the brake on Greece’s recovery, mainly due to a huge decline in tourism, the country’s economy main pillar.
Based on the information provided by the Greek newspaper “Kathimerini”, shrinking forecasts range between 1% and 8% for 2020. However, Greece will not be alone in this “storm”, as most economies are also expected to contract.
According to the baseline scenario of the Bank of Greece, GDP growth in 2020 is now projected to be zero, due to a number of significant challenges Greece faced in the first half of the year. Melanie Debono, economist Capital Economics, forecasts a sharp contraction of the economy in the second quarter. The expert underlines that Greece has already contracted 0.7% in the fourth quarter of 2019 on a quarterly basis. Subsequently, it means that Greece has been in a recession since the first quarter of 2020 due to a slowdown in the tourism sector, which accounts for 35% of the country’s GDP.
However, it should be emphasized that due to the uncertain nature of the pandemic the future development of the economy is anyone’s guess at this point. Jacob Suwalski, associate director of public finance at Scope Ratings, forecasts the Greek economy to shrink approximately 1% by 2020 if the pandemic eases in summer.