April sees consumption leap
Optimism is growing at the Finance Ministry as the figures for April and the lifting of restrictions on retail commerce, the food service and travel point to a return to normality that will pave the way for the economy to start recovering from the pandemic blues.
The macroeconomic scenario for 2021 is mainly based on the increase in consumption, given that the resources from the Next Generation EU fund are not expected to give the economy a major push in 2021, even though a large part will be absorbed within the year.
The figures the government has in its hands show consumption picking up pace at a crucial period, just as state support measures come to an end.
In total, the state will spend about 40 billion euros in 2020 and 2021, inflicting damage on the budget and increasing the public debt to a degree that will take time to rectify. April figures, meanwhile, have shown consumption to have risen an average 20% across the entire spectrum of economic activity, not compared with the same month in 2020 (when the entire country was in strict lockdown) but with April 2019.
One ministry official notes that the government has taken a wide range of measures to support businesses from the start of this crisis and continues with interventions such as the reduction of the corporate income tax deposit, the suspension of the solidarity levy and the corporate earnings tax rate cut.
Now businesses are also seeing an increase in consumption, which in certain sectors appears impressive, and this trend is likely to continue through the year.
Another ministry official highlights that 5.5 million out of the country’s 6.5 million taxpayers have not seen their incomes reduced during this crisis. If anything, the lockdowns have increased their savings and these will gradually start returning to the economy.
Out of the €22.5 billion of new deposits, i.e. those added since the outbreak of the pandemic in Greece, about half concern new savings of households and the rest come from corporations. This sum of corporate savings is the result of the freezing of investments and the various loans distributed by the guarantee fund, the banks and the state.
