Greece eyes 5.9% 2021 GDP growth

Photo: AP Kyriakos Mitsotakis

Greece Prime Minister Kyriakos Mitsotakis announced that the country’s economy is set to grow by a better-than-expected 5.9% in 2021 and further announced tax cuts and other relief measures to aid businesses and households strained by the coronavirus pandemic.

Greece emerged from a decade-long financial crisis in 2018 but experienced a sharp economic decline again by 8.2% last year over restrictions to curb the spread of the Covid-19 pandemic, which also hurt its vital tourism industry, Reuters reported.

The government's medium-term fiscal plan had projected growth of 3.6% for 2021. "Today we are announcing the revision of the (growth) target for 2021 from 3.6% to 5.9%," Mitsotakis said. “Our country is stronger today than it has been in many years. It is stronger economically, it is stronger geopolitically," he added. "Its image abroad has changed."

To offset price hikes in energy and other essential goods driven by soaring global gas and transport prices, Mitsotakis said the government would maintain the lower 13% VAT rate for coffee and soft drinks, tourism, cinemas and gyms. It would also spend 150 million euros in electricity bill subsidies and offer more heating handouts to poor households. It will also cut pension contributions by three percentage points, a so-called solidarity tax surcharge on incomes will be terminated for another year in 2022 and corporate tax will be lowered from 24% to 22% next year. Small businesses that merge will benefit from a 30% cut in taxation.

Greece's economy grew by 3.4% in the second quarter of this year, beating forecasts and giving the government fiscal space to proceed with tax relief measures. Its annual expansion rate hit 16.2% thanks to a pick-up in consumer spending and investments. The government says it is counting on 40% to 50% of 2019 levels this year.

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