Macro roundup: Budget buster

Things didn't quite go as the government planned

The Finance Ministry this week issued its final government budget execution bulletin for 2020, giving us the final picture of just how much the pandemic derailed its best-laid plans.

The primary budget deficit — which excludes debt interest payments — was 18.2 billion euros for the year, compared with a target when the budget was set for a surplus of 2.2 billion euros. The outcome represents a fiscal easing of 23.2 billion euros from 2019, when it came in at a surplus of 5 billion euros.

Overall central government spending jumped 27 percent last year, while revenue dropped 14 percent. Public Investment Budget expenditure, a conduit for much of the government’s support for private businesses, jumped to 10.6 billion euros from 5.6 billion euros in 2019.


Household support

Greek households’ disposable income surprisingly rose 1.6 percent year-on-year in the third quarter, after dropping 5.6 percent in the previous three months, according to Elstat data this week. Consumption dipped 0.3 percent after a 13.9 percent drop in the second quarter.

What’s interesting in the data is that it shows again how fiscal support has been critical in getting the economy through the pandemic. The table below, taken from the release, shows gross income fell 4 percent in quarter, but disposable income rose as households paid almost half as much tax as they did in the same period a year earlier.


Other data


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Next week’s key data

Monday:
  • January Purchasing Managers’ Index (IHS Markit)

Friday:
  • December exports and imports of goods (Elstat)


Recovery fund reading

This week, Germany’s Friedrich-Ebert-Stiftung foundation published a report I co-authored with Nick Malkoutzis and Yiannis Mouzakis of MacroPolis on Greece’s recovery plan. How Greece uses the funds it receives from the EU’s Recovery and Resilience Facility will be one of the country’s major macroeconomic issues for years, so do follow this link, read the report and let me know your thoughts.


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