Greece: Recession deeper than 6% expected in 2020-2021 – Tourist revenue to plummet by 50%

Greece: Recession deeper than 6% expected in 2020-2021 – Tourist revenue to plummet by 50%

Italian financial firm UniCredit predicts a 6.09% drop in Greek GDP in the two-year period of 2020-2021, as it estimates that the recovery of 2021 will fall short of the 2020 recession, in the second quarter of which an unprecedented economic downturn is expected. In addition, the firm also points to a  huge loss of revenue in tourism this year, which can start from 50%.

In particular, UniCredit has revised its estimates for the recession in Greece this year, but maintained its forecast that it will be deep, with the recovery that will follow in 2021 to be weaker than originally expected. More specifically, the Italian firm sees the contraction of Greek GDP moving to 16% this year (from its previous prediction of 18.6%) mainly due to the large decline in tourism revenues, whilenext year’s “return” will be limited at 11.8% (from 15.5% previously predicted).

Unparalleled shrinkage

UniCredit notes that in the first quarter, GDP shrank by less than 2% on a quarterly basis (compared to 3.6% in the Eurozone) due to positive public consumption contributions (which added 0.5% to GDP) and stocks (0.8%). These partially offset the expected negative impact on domestic demand and net exports (which accounted for 1.2% and 1.3% of GDP, respectively). However, the firm estimates that the Greek economy is likely to experience an unprecedented decline in GDP in the second quarter due to travel restrictions, which have been imposed to various extents worldwide. Greece’s main export markets are expected to be among the countries most affected by the pandemic, and this is expected to lead to a sharp drop in demand for Greek products and services. This reduction in demand will also be bolstered by the importance of shipping and tourism in service exports. The spring tourist season, which usually represents 25% of Greece’s annual tourist revenues (which reached 10% of GDP in 2019), has been lost, UniCredit points out. /ibna