Greek economy likely to shrink 4 pct this year, Stournaras says

The Greek economy will shrink much less than “extreme” scenarios projecting a 10 percent or more contraction in gross domestic product (GDP) this year, the head of the country’s central bank said on Tuesday.

“I continue to believe that scenarios of -10 percent or more are very extreme and will not be realized,” Bank of Greece Governor Yannis Stournaras, who also heads the European Central Bank’s audit committee, said during a crowdcast on the economy.

Stournaras said he expects a contraction no deeper than 4 percent.

Last week the influential IOBE think-tank forecast that Greece’s economy could contract by between 5 percent and 9 percent this year after lockdown measures to contain the spread of the coronavirus.

The projection by the Foundation of Economic and Industrial Research (IOBE) quarterly review was a sharp downgrade of previous growth forecasts of 2.2 percent to 2.5 percent, made in February.

The International Monetary Fund, meanwhile, has said it sees the Greek economy shrinking by 10 percent this year, driving unemployment to 22.3 percent from 16.4 percent in January.

Greece’s economy had been on a recovery path since a 10-year debt crisis that brought a 25 percent contraction. The economy grew by 1.9 percent last year, helped by booming tourism, which is also expected to take a big hit this year. [Reuters]