ATHENS, September 11 (Reuters) – Greek Prime Minister Kyriakos Mitsotakis said on Saturday that the economy is expected to grow 5.9% better than expected this year and announced tax cuts and other relief measures for help businesses and households strained by the coronavirus pandemic.
Greece emerged from a decade-long financial crisis in 2018, but saw its economy collapse again by 8.2% last year due to restrictions aimed at curbing the spread of the COVID pandemic. 19, which has also damaged its vital tourism industry.
The government’s medium-term fiscal plan called for growth of 3.6 percent for 2021.
“Today we are announcing the revision of the (growth) target for 2021 from 3.6% to 5.9%,” Mitsotakis said in his annual political speech in the city of Thessaloniki.
“Our country is stronger today than it has been for many years. It is stronger economically, it is stronger geopolitically,” he said. “Its image abroad has changed.
To offset rising prices for energy and other essential goods driven by soaring global gas and transport prices, Mitsotakis said the government would keep the 13% lower VAT rate for coffee and beverages. non-alcoholic, tourism, cinemas and gymnasiums. It would also spend 150 million euros in subsidies on electricity bills and provide more heating services to poor households.
It will also cut pension contributions by three percentage points, a so-called solidarity income surcharge will be removed for another year in 2022, and corporation tax will be lowered from 24% to 22% next year. Small businesses that merge will benefit from a 30% tax cut.
As Mitsotakis spoke, more than 15,000 people protested against issues ranging from economic policy to coronavirus vaccines. Clashes erupted between anti-vaccine protesters and police officers who fired tear gas and water cannons to disperse the crowds. Read more
The Greek economy grew by 3.4% in the second quarter of this year, beating forecasts and giving the government fiscal leeway to make tax relief measures.
Its annual expansion rate reached 16.2% thanks to a pickup in consumer spending and investment.
Analysts attributed the second-quarter growth primarily to the lifting of lockdowns, pent-up demand and a boost from state support measures, and less to tourism, the impact of which is expected to show in the future. third trimester.
As the pandemic crippled travel around the world, Greek tourism had its worst year on record in 2020 with just 7 million visitors compared to a record 33 million in 2019.
The sector, which accounts for around a fifth of the economy and a fifth of jobs, achieved a turnover of 4 billion euros, less than a quarter of the 18 billion in 2019.
The government says it expects 40 to 50% of 2019 levels this year.
Editing by Gareth Jones
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