Capital Economic projects 8% jump in growth in 2021

Capital Economics argued on Friday that Greece is in for a V-shaped economic recovery this year, as it is projected to follow up the 8.2% economic contraction of 2020 with an 8% rebound in 2021, compared to a government forecast of 3.6%.

Growth in the years to follow will be smaller, Capital Economics said in its report, estimated at 2% in 2022 and 1.3% in 2023. It noted that “Greece has been hit hard by the pandemic, but not quite as severely as the Spanish or Portuguese economies. And it is now experiencing a strong recovery: After posting a 4.4% quarterly increase in gross domestic product in the first quarter, we expect the economy to expand further in the summer.”

It estimated that “the tourist season will be very weak. However, the continued support of the ECB will keep a lid on sovereign bond yields,” expecting the European Central Bank to keep buying Greek bonds even after the end of its PEPP program.

Crucially, it noted, “Greece is one of the biggest beneficiaries of EU grants,” and it expects tourism to stage a full recovery next year, though that will depend on the pandemic, it said.