Koronoios: IMF shock forecast for Greece – 235,000 new unemployed in 2020 | Economy

It is no secret that the Greek Finance Ministry has also revised initial estimates for a limited recession, but the IMF, based on data so far, believes that Greece will suffer more than all Eurozone countries!

According to the information, the working groups, created by the outbreak of the crisis in the Ministry of Finance, have developed extreme scenarios with a decrease in the double-digit percentages. However, the IMF, in its updated Report on the Prospects for the World Economy, estimates that with its basic scenario, that is, the best assumptions, the recession in Greece will reach 10%! This is the biggest recession in the euro zone, which will also sink to -7.5% and one of the largest in the world, given that only San Marino (-12.2%) and Macao (-29), 6%) are estimated to is in a worse position!

With growth rates of 5.1% in 2021

The problem is that, for the rest of the eurozone, which faced arrhythmias before the pandemic broke out, the recovery in 2021 will not cover this year’s loss and, if nothing else, will put pressure on an economy that has just start to stand up. from her, after ten painful years. Therefore, growth rates, according to the IMF, will not “work”, except with 5.1% in 2021, while the entire euro area is estimated to grow 4.7%.

Is this another “black” forecast by the IMF, characterized by an exaggeration in its estimates, similar to that of recent years? Unfortunately, reports from other international organizations and investment banks are presenting similar or even worse scenarios for the Greek economy, not because it is a deeply “hurt” economy, but because it is highly dependent on tourism and consumption, which are unprecedented . Situations Regarding exports, no special data analysis is needed and it is indicative that the Fund predicts a deterioration in the Balance of Payments (-6.5% from -2.1% in 2019)

The other side of the same coin represents the estimated “explosion” of unemployment. Especially in Greece, the IMF estimates that it will increase by 5 percentage points and reach 22.3%. What does this mean in practice? That in the coming months about 235,000 jobs will be lost. The unfortunate thing is that, although the rates will fall to 19% in 2021, always with the good scenario, the unprecedented crisis will leave us a strong legacy of approximately 95,000 unemployed young people.

The problem is exacerbated as unemployment in Greece during the memorandum period acquired structural characteristics, hence the very high long-term unemployment, which means that job losses are being replaced with great difficulty. It is no coincidence that the only other country that experiences such an increase in unemployment is Spain (from 14.1% to 20.8%), which is also characterized by structural elements in its unemployment.

The IMF predicts a recession of 3% worldwide

In this “black” chapter of the IMF report, dedicated to the Great Blockade, the Fund’s economists speak of a crisis that is unlike any other, since the need to limit the spread of the virus requires unprecedented measures to suspend the economic activities, at the same time that state money must flow to support businesses and households.

Most worryingly, the Fund predicts a 3% recession worldwide, but on the condition that the pandemic “die out” in the second half of the year. However, according to the IMF, this scenario has a high index of uncertainty, which is why it has developed three alternative scenarios, one worse than the other, pointing out that the countries that have managed to reduce the spread of the virus are vulnerable to imported cases, Just remove the obstacles to movement, with the risk of sinking into an even bigger recession.

How far can the recession go? Scenarios

The first alternative scenario is based on the assumption that the pandemic restriction will last approximately 50% longer than governments estimate. In this case, the global recession could reach 6%.

The second scenario analyzes the effects of a return of the crown in 2021 and estimates that, in this case, instead of growing at a rate of 5.8%, the world economy will suffer a shock of 5 percentage points, which is why it will limit anemic recovery to 0.8% in 2021. The third alternative scenario “measures” the effects of slower coronary restriction combined with a second wave of pandemic next year. In this scenario, the global economy will be forced into a new recession of more than 2%, which will provoke an offensive against the economic impact of the pandemic.

Of course there are worse. The mandatory increase in public debt, above the basic scenario, to cover the enormous expenses in health and financial support, to scare the markets, to increase the costs of loans, to reduce the liquidity of many places, creating a spiral Horror.