The Greek economy is expected to suffer a blow once the coronavirus pandemic subsides due to its heavy reliance on tourism, according to the Organization for Economic Cooperation and Development (OECD) on the back of a previous study that found the impact of the health emergency on global tourism to last throughout the year.
More specifically, according to OECD analysts, the Greek economy is in for some tough times ahead set to see its economy shrink greater than in those in Italy and Spain, two of the hardest hit countries by Covid-19 in the world at the moment.
Titled “Evaluating the Initial Impact of Covid-19 Containment Measures on Economic Activity”, the study found that Greece may likely see a massive 35 percent reduction in GDP for the lockdown period, which will have a carry-over effect on Greeks’ salaries.
The OECD study notes that countries not reliant on travel and air connections will have a quicker recovery after the Covid-19 crisis. In these countries, sectors impacted by the shutdown also have a smaller contribution to GDP.
In Greece however, the sectors – hotels, restaurants and package holidays – affected by the ongoing restrictions and the lockdown make a significant contribution to GDP. Greece is especially reliant on the airline industry, which is now suffering one of the greatest blows to its future.
In under two months, global airline capacity plummeted from 106 million seats to 90 million, with carriers operating on less than half of mid-January levels after slashing another 20 million seats from scheduled services earlier this month due to the coronavirus pandemic.
At the same time, OECD analysts underline that though Greece has managed to date to contain the spread of the deadly virus, its reliance on other inter-connected sectors for its tourism makes it particularly vulnerable in the period ahead as airlines and tour operators – once they resume operations – will plan accordingly.
Backing this up, last week, a study by banking and financial services group ING also found that Greece, due to its reliance on tourism and travel, would find itself among the most vulnerable eurozone economies in the aftermath of Covid-19.
Commenting on OECD findings, Greek economist Aristos Doxiadis said on his Facebook account: “The significant contribution of tourism and entertainment on national income will cost us dearly in this crisis. According to OECD estimates, Greece may have the deepest GDP decline of all OECD members: -35 percent – the projection applies to the lockdown period or as long as consumers avoid certain expenses out of fear, such as travel. It also does not take into account compensatory fiscal and monetary policies put in place”.
In its latest decision, the Greek government announced additional support measures for some 800,000 businesses, 1.7 million private-sector employees and 700,000 self-employed and small business owners.