Lockdown set to cost €2.7 bln

Each day of general lockdown in Greece entails a cost of 150-180 million euros, Finance Ministry sources say, noting that the stricter and longer-lasting the restrictions that are imposed, the more painful the effects will be on the economy and society.

Nevertheless the same sources point out that even a targeted lockdown, including the capital, will come at a major cost: They say that a light lockdown including Attica will signify a 1.5% reduction in gross domestic product, or €2.7 billion per month. Hellenic Statistical Authority (ELSTAT) figures show that Attica’s contribution to Greece’s total GDP amounts to 47%.

The ministry sources estimate that the problems to economic activity will be greater than in the first wave of the pandemic due to multiplier effects: Many enterprises may not survive, while others will be unable to meet many of their obligations toward workers, the tax authorities and pension funds, even if these are suspended until April 2021. This is why the ministry is examining a plan for the partial repayment of state loans to the companies hit hardest and active in high-risk areas. The measure may be extended to take the form of a grant.

The data for September and October, when the first restrictions of the second wave came into force, are quite disappointing. The decline in the food service sector exceeds 50%, sector professionals claim, while for cafés the drop amounts to 30%-40%, depending on the area.

All this is forcing the government to revise its budget targets for this year and next. There is a clear worry the recession will top 10% in 2020, with the baseline scenario for a 7.5% rebound in the 2021 budget draft appearing too optimistic now.

Consequently the final draft of the budget, to be tabled in Parliament on November 20, will contain more support measures for the economy and a more realistic scenario for the economy’s course next year, which would be closer to what the country’s creditors anticipate.