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BoG: Tourism Uncertainty May Slow Greek Economy Rebound

The Greek economy is showing signs of recovery but uncertainty due to emerging Covid-19 virus mutations and their potential impact on tourism pose a risk, said the Bank of Greece (BoG) in its report released this week.

More specifically, in its Monetary Policy Report 2020-2021, the BoG forecasts economic growth at 4.2 percent this year and 5.3 percent in 2022.

Projections are subject to risks and uncertainties, BoG analysts note, but “nevertheless, a recovery faster than in the baseline scenario seems feasible”.

Recession in the first quarter of 2021, was milder-than-expected said the report, when economic activity declined significantly due to pandemic measures. Real GDP contracted by 8.2 percent in 2020 as a result of a decline in services exports and private consumption.

Return to solid growth, says BoG, depends on containing the pandemic, reopening all activities, and lifting travel restrictions so that tourism activity can gather speed.

Aegean Airlines Airbus A320 at Santorini International Airport in Greece on Aug. 19, 2020.

Photo: Alexandros Michailidis /

According to the report, economic activity has already picked up pace expected to accelerate further in the second half of the year driven by a rebound in domestic demand, once the National Recovery and Resilience Plan kicks in and based on an anticipated increase in tourism receipts against 2020.

However, BoG analysts are quick to point out that the Greek economy is still against short and medium-to-long term challenges.

Tourism Minister Harry Theoharis has repeatedly described 2021 as being a “difficult year”, with the ministry expecting receipts to reach 50 percent of 2019 levels in the best case scenario.

Over the immediate period, the primary concern analysts say is to contain the pandemic and get the economy back on a path to solid growth.

“Although the vaccination program is well on track, the spread of the virus mutations are a source of uncertainty, while a worsening of the pandemic could result in a weak tourism season and delay the return to normality,” the report said.

Looking ahead, chronic weaknesses of the Greek economy, including low structural competitiveness and high unemployment expected to increase once support measures are withdrawn, must be addressed.

In this direction, BoG underlines the importance of putting Next Generation EU resources to good use fast and efficiently.

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