The potential threat of the “D” mutation casts a shadow of uncertainty over the Greek economy, although the Ministry of Finance does not appear pessimistic at the moment, maintaining the forecasts for the economy and the course of tourism. The vaccine weapon has activated the government to provide acceleration incentives for the immunization wall, in order to protect citizens, but also to shield expectations for this year’s recovery.

The Ministry of Finance has budgeted a conservative number for this year’s revenues that reach 40-45% of those in 2019 – and so the scenario for a recovery in 2021 close to 4% appears realistic at the moment. According to competent officials, if in the end turnover is better and this percentage rises ten points, close to 55%, it automatically has a positive effect on the economy. This means that tourism in 2019 was about 10% of GDP, so if tourism goes better by ten points automatically it contributes one unit to GDP.

However, the onset of the mutation is causing shocks to the revenue targets for 2021, and it seems that the estimates for a target of 50% of the turnover in 2019 are moving away, while there are concerns for undermining the 40% threshold.

According to the report on the Monetary Policy of the Bank of Greece, the economic activity in the second half of 2021 is expected to be supported by the start of the implementation of the projects of the National Recovery and Sustainability Plan and by the partial return of receipts, close to 40%, compared to those of 2019. The full recovery will come after two years, while, as it is emphasized, despite the fact that the vaccination program is progressing, the spread of mutations is a source of uncertainty and so any worsening of the pandemic could lead to a sluggish tourist season and delay the return to normalcy.

Regarding the receipts from the travel services, the report of the Governor of the Bank of Greece points out that there is moderate optimism, as the recovery of tourism activities is closely related to the successful response to the pandemic and in particular to the course of vaccination. Receipts from inbound tourism are estimated to increase by about 65% compared to 2020, but will remain at a significantly lower level compared to 2019.

It is recalled that travel receipts in 2020 amounted to 4,319 million euros, showing a decrease of 76.2% compared to 2019 (18.17 billion euros). The Bank of Greece estimates that revenues in 2021 will reach 7.12 billion euros or about 39.2% compared to 2019.

Review for upward recovery?

The signs from the consumption and the data for income of May – June give the tone of optimism for the course of the economy. Depending on how the data will develop until August, it is not ruled out that there may be changes in the forecasts for 2021.

The financial staff has left open the possibility for an upward revision of the estimates for this year’s recovery – which to date is 3.6% -, while convergent estimates show a recovery of 4.7% and more than 5% in 2022. In addition, the Fund’s resources, of which € 7.8 billion will be disbursed in 2021, as well as the positive messages from the smaller recession of the first quarter, prepare for better forecasts for which the Commission forecasts a recovery of 4.1% this year and 6% in 2022, while the IMF sees 3.3% this year and 5.4% in 2022.

According to the Medium Term Fiscal Strategy Framework based on the baseline scenario – ie without a reversal – the average growth is of the order of 4%, with a cumulative increase of investments by 88.4% and exports by 43.1%. Thus, the implementation of vaccination programs internationally may provide a way out and create a less volatile environment, but risks remain.

According to the scenarios formulated by the government, the first and more optimistic for 2021 is one unit higher growth than the baseline, 4.6%, instead of 3.6%. The other two scenarios are more pessimistic and show up to 1 point lower – 2.6% for this year – while the second “cuts” at least 0.19% more. Regardless of the forecasts, however, the estimates for the reduction of unemployment (14.6% this year, to 9.6% in 2025) and for the increase of investments (up to 30%) remain stable.

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