Capital Economics said in a report published on Wednesday that the Greek economy will shrink by 9.7% in 2020 – which is better than the government’s projection for a 10.5% decline – and recover by just 4.5% in 2021 due to the second lockdown that “is set to last at least as long as the first.”
The economy’s full recovery will come in 2022, the firm projected.
This will be partly thanks to the vaccine’s rollout in the second and third quarters of 2021, which will allow tourism to stage a rebound.
“Greece relies heavily on foreign tourism, and so stands to benefit more than most from a vaccine,” it stated.
The report further warns that “EU funds are no panacea. Greece is expected to receive EU grants worth around 9% of GDP during 2021-26, the biggest of any eurozone country. To the extent that the funds are used effectively and fund additional spending, there will be some positive impact on GDP."
"But Greece has not absorbed EU cash efficiently in the past and the grants allocation is small relative to the rise in debt in 2020,” so Capital Economics has not incorporated those resources into its assessments.