Written by Konstantinos Manikas, Economist – Psychologist, Writer
More than a decade has passed since the huge financial crisis that turned into a fiscal and monetary crisis. Its consequences are now beginning to be overcome, but other events, such as the World Trade War, the return of tariffs as a bargaining chip, and the current limited effect of quantitative easing on economic growth, have long since revived the scenarios of a recession.
As if those predictions weren’t enough, an unforeseen health event is coming to boost that prospect. Adaptations to the worst development goals of all states have already begun. For our country, the initially ambitious goal of 2.8% lands at 2%.
In fact, if our tourism is affected more than it seems so far, it is likely that the growth rate will move lower than in 2019, creating a budget gap of 500-600 million euros. That is why the discussion with the European institutions for temporary budgetary relaxation and non-recording of the extraordinary measures in the budgets, has started.
Of course, the evolution of such a virus cannot be described as completely controlled, and above all, no one can know to what extent it will affect economic behavior. Reactions such as that of the United States, which banned travel from Europe for a month, are more likely to hide panic and make it more difficult to maintain any economic composure.
The reaction of the Greek government was immediate and seems to fully understand the need for emergency measures to facilitate operations. However, our budgetary margins are limited and the existing tax exemptions leave even less room for domestic movements.
The EU, this time, must show the foresight and methodically that did not exist in 2009, when it followed and did not shape the facts, allowing the crisis to hurt it crucially. Let’s hope that in Brussels they will not be consumed again in an endless analysis that will eventually confirm the doubts that it will not proceed to drastic interventions.
Transient flexibility in fiscal targets is imperative. The use of any available financial tool that will facilitate the business world, is necessary with the good help of the ECB. The use of budgeted resources for emergencies should be taken for granted.
Greece will push in this direction, as will other countries affected by the epidemic. Remains in the EU to prove that it has learned from the mistakes of the past and to be less hesitantly and more effective in avoiding the spread of the economic “coronavirus” and not in managing, after a holiday, its effects.