Greek economy to shrink by 5.8 pct in 2020: central bank

Greece’s central bank expects the country’s economy to shrink by 5.8 percent this year in its baseline scenario, but risks related to the coronavirus pandemic could bring the economic contraction up to 9.4 percent, the Bank of Greece (BoG) said Monday.

In its latest monetary policy report, the BoG drafted a baseline scenario and two alternative ones about the Greek economy.

The baseline scenario sees a 5.8-percent contraction this year followed by a near-complete rebound by 5.6 percent in 2021 and a 3.7-percent expansion in 2022.

The “favorable” scenario of the BoG, referring to a milder return to normality after this spring’s lockdown, provides for a 4.4 percent shrinking of the gross domestic product (GDP) in 2020 before a 5.8 percent recovery in 2021 and a 3.8 percent growth the following year.

The adverse scenario of the central bank, which concerns a second wave of the pandemic in Greece, points to a 9.4-percent decline of GDP in 2020, a 5.7-percent advance in 2021, and a 4.5-percent expansion in 2022.

In its report, the central bank further projected a drop in private consumption, exports, tourism takings and shipping revenues this year, followed a major recovery in 2021 and 2022 jump-started by private initiatives and public expenditure. The fiscal deficit this year will equate to 2.9 percent of GDP.

The European Commission has predicted a 9.7-percent contraction this year in Greece.