Τhe Greek economy is recovering despite the Covid-19 pandemic but due to the high level of debt, Greece must maintain sustainable public finances, said the European Commission in its 12th enhanced surveillance report released on Wednesday.
The Commission is forecasting growth in 2021 to reach 7.1 percent – fast approaching pre-pandemic economic activity levels – attributing the estimate to a strong first half of the year and a better-than-expected tourist season.
Real GDP is projected to grow by 5.2 percent in 2022, the report said.
“While still very intense, the impact of the pandemic is expected to gradually diminish with the ongoing vaccination campaign. The accommodative fiscal and monetary policy, coupled with the expected strong boost from the implementation of Greece’s recovery and resilience plan are set to sustain the momentum going forward,” the report said.
Greece recovery gaining traction driven by the tourism sector
Referring to Greece’s recovery rate, the report’s analysts note that “recovery is gaining traction” driven in large part by the tourism sector. The economy grew by 4.5 percent and 3.4 percent (quarter-on-quarter) in the first and second quarter of 2021, respectively.
“The external sector is expected to be markedly improved in the third quarter of 2021 in light of good preliminary tourism data following the opening of the country to tourism in May and the lifting of mobility restrictions across the EU during the summer.”
It goes on to add that the labor market will remain resilient thanks in large part to the tourism sector which together with continued government job protection schemes supported employment over the summer.
Economic recovery and the high demand for seasonal workers in tourism accelerated job creation, the report said. Indicatively, unemployment in September stood at 13.3 percent, 3 percentage points below its September 2020 level, thanks to the recovery “notably in the tourism sector”.
The report also cites the 2022 draft budget plan tabled in parliament last Friday, which confirms that current Covid emergency support measures will be phased out by the end of 2021.
“Despite the challenges of the pandemic, Greece has made further progress towards achieving the agreed commitments,” said Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, on Wednesday.
Late last month, Finance Minister Christos Staikouras said Greece was aiming to exit its enhanced surveillance status in 2022 and that the country was on track for a strong economic recovery hinging on the effective use of recovery funding and investments.