Commission: Greek Economy Recovering ‘Earlier Than Expected’

Syntagma Square, Athens. Photo © GNTO/Y Skoulas

The European Commission (EC) praised Greece for advancing reforms and meeting commitments agreed to as part of its post-bailout program despite the challenging circumstances caused by the Covid-19 pandemic and noted that the economy was demonstrating an “earlier-than-expected recovery”.

In its 11th enhanced surveillance report, the Commission confirmed that real GDP increased by 4.5 percent and 3.4 percent on a quarter-on-quarter basis in the first two quarters of the year after an 8.2 percent slump in 2020. 

The report attributes the upswing to investments and accumulation of inventories. It goes on to forecast a 4.3 percent increase in GDP in 2021 and a 6.0 percent rise in 2022, taking into account the investment dynamic driven by the recovery and resilience plan.

Meanwhile, tourism, the Commission said, helped keep unemployment down to 15.9 percent in Q2 2021 compared to 17.1 percent in the same quarter last year.

The positive outlook is a result of Greece’s ongoing implementation of reforms across key policy areas, the report said, including accelerating or finalizing privatizations such as the Hellinikon project, revising the legal framework to facilitate investments, as well as progress made on the end-to-end IT collection system for tax administration, among others.

Referring to the report released on Wednesday, Greek Finance Minister Christos Staikouras said it was the result of “hard and systematic work as well as of the excellent cooperation between members of the government under the guidance of the prime minister… and highlighted the key role of the ‘Greece 2.0’ national plan for recovery”.

Looking ahead, the progress of vaccination as well as the recent spike in Covid-19 cases create uncertainty that may affect prospects, the Commission said.

Meanwhile, Bank of Greece Governor Yannis Stournaras told POLITICO that the Greek economy could return to pre-pandemic levels this year on the back of a fast-moving investment drive.