Lockdown would shave up to 3% off GDP a month

A second lockdown would come at a huge cost to the Greek economy, deepening the recession further and harming economic sentiment, with recent experience in Europe showing that one month’s horizontal restrictions curtail gross domestic product by up to 3%, Finance Minister Christos Staikouras tells Kathimerini.

If existing measures to protect public health start bearing fruit another lockdown can be averted at this stage, but unless the situation stabilizes the government will need to make decisions so as to prevent the worst possible scenario ahead of a difficult winter. The main problem currently is in Attica, which accounts for 50% of the country’s GDP and the bulk of new coronavirus infections over the past few weeks.

“The state has the cash reserves to support a lockdown, if this becomes necessary, but the damage to the real economy would be significant,” Staikouras says.

Nikos Vettas, director general at the Foundation for Economic and Industrial Research (IOBE) and professor at the Athens University of Economics and Business, tells Kathimerini that as long as the pandemic persists, the tighter the margin of fiscal and monetary policy, and the economies of Greece and other countries may find themselves on a difficult path and in a prolonged crisis.

He goes on to warn that fiscal choices will be particularly challenging as of next year, as every single euro in public coffers is precious and the priorities chosen will need to be accompanied by interventions aimed at the efficiency of corporations and of public services.

For his part, Markos Veremis, company chairman at Upstream and partner at Big Pi ventures, argues that we have to continue listening to the recommendations of the scientists and experts, stressing that a significant surge of the virus would inevitably also inflict great damage on the economy.

“Such crucial decision must be made with a clear head and at the right time. A lockdown designed in a calm and collected fashion is different to a lockdown imposed in a panic, as was the case in Italy last spring,” he notes.