Greece COVID-19
Long-term economic performance
While Greece managed to avoid a large first wave of COVID-19 infections by locking down early in spring 2020, it suffered from two further waves – and two further lockdowns – in November-December 2020 and in AprilMay 2021. Most activities re-opened in mid-May 2021.
From 2017, Greece’s economy had started to recover from its long slump after the euro crisis. It achieved a 1.9 per cent annual growth rate in 2019. Bailouts by the EU and the IMF, and the austerity programme had led to an improvement in the primary balance of 1.5 per cent of GDP between 2009 and 2016.42 However, GDP in 2019 remained a quarter below its 2007 peak, and total investment had significantly fallen as a share of GDP since 2008 (see Chart 10). Employment remains low relative to the OECD average, particularly among women, and this translates into high poverty rates.
In 2020, government support to the economy amounted to €23.5 billion (13.7 per cent of GDP).40 This involved emergency support for the healthcare sector (such as hiring extra staff and reducing VAT on protective gear) and providing assistance to hard-hit individuals and businesses, respectively through transfers (such as cash stipends and extended unemployment benefits), and liquidity support (such as loan guarantees and deferred tax payments).
To improve productivity growth, Greece needs substantially higher investment in physical and human capital. Companies need to adopt new technologies, and government needs to improve skills provision and employment services to improve matching between jobseekers’ and employers’ needs.43
Despite the government stimulus, Greece’s economy contracted by 8.2 per cent in 2020. While the OECD forecasts GDP growth to reach 3.8 per cent in 2021 and 5 per cent in 2022, GDP per capita is forecasted to reach pre-crisis levels only after mid-2022.41
Chart 10: Investment share of GDP: Greece vs the eurozone Eurozone
Greece
30
Total investment, % GDP
25
20
15
10
5
0 2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Source: Eurostat .
40: International Monetary Fund, ‘Policy responses to COVID-19’, website last updated on July 2nd 2021. 41: OECD, ‘Economic Outlook’, May 2021.
42: OECD, ‘Economic survey of Greece’, July 2020. 43: Bank of Greece, ‘Summary of the annual report’, March 2020.
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