Eurobank: Most of the pandemic losses in real GDP recovered in 2021

2021 started with high uncertainty due to the 2nd lockdown and closed with growing concern due to the energy crisis, notes Eurobank in its weekly bulletin “7 Days Economy”, adding that in recent days the degree of uncertainty has increased due to the chain reactions caused by Russian invasion of Ukraine.

As he notes, last Friday, ELSTAT announced the national accounts for the 4th quarter of 2021 and the first estimate for the whole year. After the deep recession in 2020 (9.0%), the Greek economy recovered rapidly, recording a growth rate of 8.3%.

The Greek economy, despite high fiscal intervention (€ 16.9 billion in 2021 from € 23.1 billion in 2020 according to the 2022 Budget Report), did not outperform the recent estimates of official bodies such as the European Commission (forecast for real GDP growth of 8.5% in 2021). Nevertheless, the performance of the economy was clearly better than initially estimated. 12 months ago, the average market estimate for the real growth rate in 2021 was at 3.5% (source Focus Economics), while the peak of the cyclical recovery from the COVID-19 coronavirus pandemic was expected in 2022. Finally, a year earlier.

The high size of the support measures, the resilience-adaptability of the economic actors in the 2nd lockdown, the higher than expected tourist receipts (€ 10.7 billion, 58.6% of the travel revenues of 2019) and the big increase of the industrial production interpret to some extent the aforementioned result.

Despite increased uncertainty, fixed assets strengthened by 19.6% year-on-year in 2021, with their share of GDP growing to 12.8%, but still the lowest among EU-27 Member States (22, 0% in the EU-27 and the Eurozone). The category of mechanical equipment and weapons systems had the highest contribution to the increase of fixed investments (increase 41.1%, contributing 53.7% of the total increase of fixed investments), followed by: housing (increase 26.5%, contribution 12 , 8%), transport equipment (increase 31.9%, contribution 12.2%), information and communication technology equipment (increase 18.1%, contribution 9.5%), other constructions (increase 4.8%, contribution 6.4%) and other products (increase of 6.0% contribution 6.3%).

The deficit of goods and services remained relatively high in 2021, as domestic demand, ie total consumption and total investment, contributed approximately 9/10 of real GDP growth and net exports of goods and services the remaining 1 / 10.

Taking into account the recession in 2020 and the recovery in 2021, the annual real GDP of Greece in 2021 was lower by 1.4% compared to 2019 (at the quarterly level, the real GDP of Greece in the 4th quarter 2021 was equal to corresponding to the 4th quarter 2019). Therefore, in terms of real GDP change in the two years of the pandemic, the performance of the Greek economy was similar to that of the Eurozone, better compared to other southern countries such as Spain, Portugal and Italy, but worse than Croatia , Malta and Cyprus.

In the 4th quarter 2021 the real growth rate in Greece slowed to 0.4% QoQ / 7.7% YoY from 2.0% QoQ / 11.4% YoY in the previous quarter. The statistical base effect (carry-over effect) for 2022 was formed on the positive ground of 1.6 percentage points. Public consumption shrank on a quarterly basis for the second quarter in a row, sending a first signal of impending fiscal adjustment. Private consumption continued to rise for the 6th quarter in a row, surpassing pre-pandemic levels in quarterly terms. At the same time, however, this positive development implies that the margins of the technical recovery created by the closing-opening of the economy have now been exhausted.