July 9, 2020 / 11:21 AM / a month ago

Greek economy to shrink up to 10.5% as COVID-19 impact deepens: IOBE

ATHENS (Reuters) - Greece’s economy will contract by 7.5-10.5% this year due to the impact of COVID-19, the country’s influential think tank IOBE said on Thursday.

The quarterly projection by the Foundation of Economic and Industrial Research (IOBE) was a downgrade of its previous forecast of 5%-9% economic contraction made in April.

Greece lost a quarter of its economic output during its 10-year debt crisis. Its economy grew by 1.9% last year and the government was initially aiming for 2.8% growth this year.

But a lockdown it imposed to stem the spread of the coronavirus pandemic earlier this year has hurt business activity. Travel restrictions around the world were also taking a toll on the tourism-dependent economy.

“The situation over the health problem is still worrying,” the head of the think tank Nikos Vettas said, adding that Greece should use European funds that will be made available to boost infrastructure and shift to a new growth model.

The unemployment rate, the euro zone’s highest, is seen rising to 19.3% - 20.5%, from 17.4% last year as the coronavirus forced many businesses to halt operations, the IOBE said.

(This story corrects to change figure in headline and lead to 10.5% from 10%)

Reporting by Angeliki Koutantou and Lefteris Papadimas;Editing by Elaine Hardcastle

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