The Greek government tried to combat the economic downturn with a loose fiscal and monetary policy (through the European Central Bank). The initial aim was to support pretty much everyone from the public and private sector for the bad months of the covid-19 lockdown and hope for economic recovery when the summer arrived, with the tourist industry saving the day. It soon became evident, however, that this was wishful thinking. People from the tourist industry admitted that it could take years for the industry to recover its past numbers. The situation looked even worse once people realized how dependent the whole economy is on tourism: it accounts for 20 percent of GDP and provides 22 percent of all employment in Greece. Furthermore, the Greek government’s solutions, like those of most of the other governments in Europe, were primarily demand-side policies.

As I predicted in one of my past articles, these measures could only provide short-run relief, only postponing the pain until later. The unemployment rate saw a 1.2 percent increase from March to April, of 1.3 percent from April to May, and it saw a minor decrease during the summer tourist period. The Organisation for Economic Co-operation and Development (OECD) has estimated that the unemployment rate will reach roughly 20 percent by the end of the year.



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