Greece’s Growth Rate to Reach 7.5% in 2021 According to New Projections



Credit: pxfuel

Finance Minister Christos Staikouras and Alternate Minister Theodoros Skylakakis on Monday brought a draft for the 2021 state budget before Parliament.

The plan envisages a robust economic growth rate of 7.5 percent for the next year, and features a series of measures to lower the tax and social insurance burden for enterprises with the aim to boost recovery and create new jobs.

The budget plan as drafted also envisages a primary deficit of 1.0 percent in 2021.

The plan projects a 8.2 percent economic contraction this year and a 7.5 percent growth rate in 2021 to 185,215 billion euros, from 170,721 billion in 2020. The primary deficit will reach 6.3 pct of GDP this year and 1.0 pct of GDP in 2021.

The unemployment rate is projected to reach 18.6 percent for this coronavirus-burdened year of 2020, falling to 16.5 percent in 2021. Budget revenue is projected to be 53,705 billion euros in 2021 from 50,147 billion this year, with tax revenue rising to 49,546 billion euros from 44,594 billion, respectively. Budget spending is projected at 63,884 billion euros in 2021, up from 68,528 billion this year.

Finance Minister Christos Staikouras, commenting on the budget plan, said it was drafted during a period in which the global economy and societies continued to be tested by the most serious health crisis of the last 100 years and the resulting worst annual global economic recession since the end of the World War II.

“The 2021 state budget is drafted, unfortunately, under odd and extremely adverse conditions and in a state of serious uncertainty,” he stated, adding that this uncertainty forced European institutions to decide to extend a more flexible fiscal policy in 2021 to minimize the economic and social ramifications of the pandemic as much as possible.

Staikouras said that EU funds safeguarded by the Greek government from the Recovery Fund and “React EU” will add two percentage points to economic growth in the country in 2021, from the 5.5 percent base scenario to 7.5 percent (final provision).

Under the adverse scenario, however, economic growth will reach only 4.5 – 5.0 percent in 2021.

Staikouras said that a provision for a dynamic economic recovery in 2021 is also based on measures to lower the tax and social insurance burden on enterprises to encourage job creation, including lowering social insurance contributions by three points, abolishing a solitary contribution tax and hiring new workers without social insurance contributions for up to six months.

The 2021 budget also envisages maintaining a capital buffer to deal with any future needs for maximum economic security.