Greece’s economy is expected to rebound 4.2% this year after collapsing 8.2% in 2020, the head of the country’s central bank said at an annual meeting of shareholders on Tuesday.
The contraction of the economy last year turned out to be less severe than expected despite strict restrictions to contain the coronavirus pandemic. The European Commission and the Bank of Greece had forecast a 10% drop in gross domestic product. “Three factors that will influence the speed of the recovery include accelerating vaccinations, maintaining financial support measures and swift use of national recovery funds,” Bank of Greece Governor Yannis Stournaras said.
The central bank’s forecast is higher than the projections of the European Commission, which forecasts the Greek economy to grow 3.5% this year, as restrictions aimed at stemming the spread of COVID-19 will still weigh heavily. Stournaras said the government’s primary budget balance is expected to show a deficit of 5.5% of GDP this year from 7.0% last year due to financial support to ease the blow of the pandemic.
While Greece fared better than many other European countries, a wave of COVID-19 infections forced the government in November to re-impose a lockdown it had previously lifted. “The fact that (containment) measures have been in place for a long time, combined with uncertainty about the dynamics of the pandemic and the pace of vaccinations around the world, is fueling economic uncertainty and delaying recovery,” Stournaras said .
Turning to the country’s banking sector, Stournaras said the ratio of non-performing loans to banks is expected to drop to 25% this year, from 30.2% at the end of 2020. “Further steps need to be taken to facilitate the early recognition of credit losses on the pandemic account, ”he said.
He said that in the post-pandemic period, the Greek economy would face two risks – a large number of bankruptcies of unsustainable companies and the loss of jobs, especially in low-skilled and intensive sectors. labor.
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