Greece says coronavirus to drive economy into recession

Greece’s economy will contract this year because of the coronavirus lockdown but the projected recession will be temporary, the finance minister said on Tuesday.

It was a rapid re-estimation as the minister had projected eight days ago that the economy would weather the coronavirus storm and grow just over 0 percent.

“The situation in Greece’s economy has deteriorated and continues to deteriorate,” Christos Staikouras said in a televised address. “The crisis is deep, it will become deeper and the economy will turn into recession in 2020.”

Greece, which exited its latest bailout in 2018 and was recovering after a multi-year downturn, had been projecting that its economic output would increase by 2.8 percent.

Staikouras said the downturn will be temporary but the damage to the economy in the short term would be significant.

The country confirmed 48 new cases of coronavirus on Tuesday, bringing the total since its first recorded case on Feb. 26 to 743 people, including 20 people who died. More than 130 people are being treated in hospital.

Among the latest cases were 21 Greek passengers of two flights from Spain, who the state put protectively in quarantine in a hotel earlier this week.

“It was a health bomb ready to explode,” crisis management minister Nikos Hardalias said.

Greece has imposed a curfew restricting the movement of people, with few exceptions, and has halted arrivals from non-EU citizens and those from Italy and Spain. It has also shut down hotels across the country.

Tourism is the Greek economy’s main driver and the sector expects hundreds of millions of euros in revenue losses.

Prime Minister Kyriakos Mitsotakis said last week the government would inject 10 billion euros to support the economy through tough times due to the coronavirus outbreak.

Greece’s central bank slashed growth projections for the economy to 0 percent from a previously estimated 2.4 percent this year due to the impact of the coronavirus epidemic. [Reuters]