Greece Braces for New, Coronavirus-Driven Recession

Since the second week of March, the Greek government has been attempting to delay the spread of the virus by shutting down most economic activity, ordering the closure of all shops apart from supermarkets, bakeries, petrol stations and pharmacies.

It has also announced emergency funds of over 5 billion euros, from national and EU funds, to help businesses and the labour market to absorb the economic shock.

On March 9, Greece asked and was granted a relaxation of economic rules dictated by the Eurogroup, the EU Council committee handling economic policy, which allowed the government to abstain from the obligation of ensuring a 3.5 per cent GDP surplus annually.

Having a high fiscal surplus has been a key term for Greece receiving economic aid to handle its debt crisis. It delivered 3.8 per cent of GDP in 2016, 4.1 per cent in 2017 and close to 3.8 per cent in 2018.

The Eurogroup has decided that all the Greek government's expenditures on its health and migration policies won't count against GDP in 2020, as well as any emergency spending on the unemployed and impoverished.

The Eurogroup has estimated that 1 per cent of the EU's GDP has already been deployed to stabilise member states' economies. But former Finance Minister Eukleidis Tsakalotos, who managed the country's exit from austerity by the summer of 2019, argued that more financial support is needed.

"The approach is to spend a little and then see what happens," Tsakalotos said in a TV interview.

"I say the opposite is necessary - spend a lot now, support the health system, working people, vulnerable groups. Doing a little now and then some more afterwards is what is going to turn a recession into a crisis," he added.

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