Greece should expect at least a six per cent drop in GDP this year due to the loss of tourism revenue in the pandemic, the International Monetary Fund (IMF) said in its External Sector Report 2020, published on Thursday.
Greece will be second in the world in terms of the negative impact caused byh the tourism slowdown – only Thailand will see worse effects, according to the report. In April, the IMF had forecast that Greece would face the largest recession in the eurozone due to the pandemic.
The sharp decline in hotel bookings, international travel, and tourist arrivals were all factors noted in the report. “Losses in tourism proceeds exceeding 2 per cent of GDP are expected to be concentrated among large net tourism exporters, such as Costa Rica, Egypt, Greece, Morocco, New Zealand, Portugal, Spain, Sri Lanka, Thailand, and Turkey.”
“The rise in tourism trade balances is expected to be spread more evenly across tourism services net importers. Although uncertainty is high, the effects on tourism may persist to some extent in 2021 and beyond. Forty per cent of respondents to a UN World Tourism Organization survey expect international tourism demand to start recovering only in 2021, with professionals in the Americas being slightly more pessimistic,” the report shows.
The future remains grim for the country’s economy, particularly if there is a second wave of the novel coronavirus.
“Uncertainty is high,” the report says, “but the macroeconomic consequences will be greater for economies with pre-existing vulnerabilities. Growth is expected to be slow for the economy of almost any Eurozone member state in the near future.
“A further worsening in risk sentiment could—for economies with pre-existing vulnerabilities, such as large current account deficits, a high share of foreign currency debt, and limited international reserves—further increase risks of an external crisis.”
Unemployment in Greece reached 17 per cent in May this year, the country’s statistics service ELSTAT said this week, amounting to 3.729.591 people. In April this year, unemployment was recorded at 15.7 per cent.
In comparison with the same period in 2019 however, unemployment saw a small drop this year, compared with 17.2 per cent in May last year.
The pandemic has caused a large drop in international business transactions in Greece, and has reduced commodity prices, so therefore it is much more difficult to obtain external financing, the report notes.
Greece’s annual EU-harmonised inflation stayed negative for a fourth month in July, the country’s statistics service ELSTAT said on Friday.
The reading was -2.1 per cent year-on-year from -1.9 per cent in June.
The data also showed headline consumer price inflation at -1.8 per cent from -1.6 per cent in the previous month.
Prices were forced lower by transportation and housing, the data showed, as the COVID-19 disease has hurt the sectors.
Greece went through a deflation phase during its multi-year debt crisis as wage and pension cuts and a multi-year recession took a heavy toll on household incomes.