Contraction still seen at 8%

Greece’s economic contraction will come to 7.8% this year, the Center of Planning and Economic Research (KEPE) projects, matching the government’s forecasts. Finance Minister Christos Staikouras told Skai Radio on Friday that the slump will come to “around 8%” but added that the uncertainties remain great and the ministry retains its forecast based on the data from the first half.

“We anticipate the recession to be deep, but not any deeper than the eurozone’s,” Staikouras said ahead of the submission to Parliament of the 2021 draft budget on Monday.

He added that a strong rebound is expected for 2021, which will be bolstered further by the resources from the European recovery funds. “By end-2021, we will have covered the biggest part of the 2020 recession,” the minister said.

KEPE also speaks of great uncertainty, with the average gross domestic product contraction rate in the year’s second half projected to come to 7.7%, after a decline of 7.9% in January-June.

“The current juncture,” read the KEPE release, “and the estimates about the course of GDP in 2020 have a particularly high degree of uncertainty, which renders short-term forecasts exceptionally difficult. This is due to the inability to anticipate the expansion, strength and duration of the pandemic in the next few months both domestically and internationally, and to the difficulty in quantifying the offsetting effect of the extensive measures for shielding the economy.”

KEPE expects that Greek GDP will record an annual decline of 6.9% over the third quarter of the year and that the last quarter will see an 8.4% contraction from October-December 2019.

Meanwhile HSBC expects the quarterly recovery of the economy to come to a robust 7% in July-September compared to the lockdown quarter of April-June, leading the bank to affirm its forecast for the entire year at 8.2%. However, it warns that the fourth quarter will see growth of 1.4% compared to the third quarter.