IMF revises GDP drop to 9.5% for 2020

Greece will see an economic contraction of 9.5% this year, the International Monetary Fund estimates in its second post-bailout report on the Greek economy, against a previous forecast for a 10% drop.

The Fund, one of Greece’s main creditors, went on to give Athens a revised target for a primary deficit of 2.5% of gross domestic product for this year, due to the negative effects of the coronavirus pandemic. It calls on Greece to amend its fiscal mix by strengthening healthcare expenditure, tackling the gaps stemming from the Social Solidarity benefit, and creating opportunities to retrain the workforce.

The report gives a positive assessment of the measures taken to date, with the Fund noting that the government’s economic support package is large, timely and appropriately consists mainly of temporary measures within budget, targeted at households and corporations that have been hit hard.

It also has also frozen the issue of the public debt for now, noting that the medium-term capacity for the repayment of Greece’s national debt remains sufficient. That reflects the manageable gross funding needs under the baseline scenario.