Wed, 20 Oct 2021

Greece sees hopeful jump in 2021 economic growth of 5.9%

Robert Besser
16 Sep 2021, 01:45 GMT+10

ATHENS, Greece: Greek Prime Minister Kyriakos Mitsotakis said on Saturday that the nation's economy is predicted to grow by 5.9 percent this year.

He also announced tax cuts and other relief measures to help businesses and households suffering from the impact of COVID-19.

After emerging from a decade-long financial crisis in 2018, the pandemic caused the Greek economy to fall again by 8.2 percent last year, with the vital tourism industry being badly affected.

The government's medium-term fiscal plan predicted a 3.6 percent growth for 2021, but this has been revised to 5.9 percent.

During his annual policy address in the city of Thessaloniki, Mitsotakis said, "Our country is stronger today than it has been in many years. It is stronger economically, it is stronger geopolitically," as quoted by Reuters.

He added that the 13 percent VAT rate will be continued for coffee, soft drinks, tourism, cinemas and gyms to offset price rises in energy and other essential goods caused by high global gas and transport prices.

In addition, small businesses that merge will see their taxes reduced by 30 percent, while pension contributions will be lowered by three percentage points, and corporate taxes will drop from 24 percent to 22 percent next year.

In the second quarter of 2021, Greece's economy unexpectedly grew by 3.4 percent, and its annual expansion rate reached 16.2 percent due to rising consumer spending and investments.

Analysts attributed these second quarter figures to the lifting of lockdown measures, state support policies and pent-up demand, but less from tourism, whose impact is expected to be felt in the third quarter.

Due to the pandemic, the Greek tourism sector suffered its worst year on record in 2020, receiving just 7 million visitors, compared with 33 million in 2019.

Accounting for some 20 percent of both the economy and number of jobs nationwide, the tourism sector generated €4 billion in 2020, far lower than the €18 billion in 2019.

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