of the lockdown measures since early may, the expansionary and significant fiscal measures taken by the government and the extensive actions of eu institutions including fiscal, monetary 2 / 6 bis central bankers'speeches and regulatory / supervisory interventions, are expected to mitigate the impact of covid - 19 on the economy in 2020 and lead to a recovery in 2021. according to the bank of greece baseline scenario, economic activity in 2020 is expected to contract by 5. 8 %, and to recover in 2021, posting a growth rate of 5. 6 %, while the general government primary balance is projected to record a deficit of over 4. 0 % of gdp in 2020, due to the sharp slowdown of economic activity and the fiscal discretionary measures adopted by the government. adding the fiscal costs of the council of state recent decision regarding pensions, the primary deficit of the general government is expected to increase even more. the currently available soft data and conjunctural indicators point to a significant contraction of economic activity in the second quarter and the year as a whole, but are in line with our expectations. the forecasts are subject to considerable downside risks and uncertainties. first of all, the decline in the tourism sector might be sharper than currently expected. a second wave of the pandemic would derail the global and domestic recovery and worsen fiscal performance. furthermore, a resurgence of the refugee crisis and tensions with turkey could have negative repercussions on tourism. upside opportunities are related to the implementation of the commission ’ s adopted proposal on the “ next generation eu ” instrument from 2021 onwards. the early discovery of a vaccine for covid - 19 is also a strong upside opportunity. despite the risks and uncertainties in our forecast, we remain more optimistic compared with other institutions regarding the baseline projection for 2020. for example, the european commission projects a contraction of 9 % in 2020 for the greek economy in its summer forecast ( revised downwards from 9. 7 % in its spring forecasts ). the bank of greece expects a milder contraction in greece relative to the euro area for the following reasons : 1. the successful containment of the pandemic in greece as reflected in the relative health outcomes. indicatively, the number of deaths per million people is among the lowest in the eu. academic research has shown that the better a country manages a pandemic the faster the rebound of the economy. 2. the greek economy had a strong positive momentumbefore the outbreak of the crisis.

indicatively : 1. the projected growth rate before the pandemic was 2. 4 % and 2. 5 % for greece vs. 1. 1 % and 1. 4 % for the euro area for 2020 and 2021 respectively ( dec. 2019 ). the growth rate of 2020 q1 was - 0. 9 % for greece and - 3. 1 % for the euro area ( year - onyear ). 1. the size of tourism is not as large as assumed by many analysts in the past. research at the bank of greece shows that the direct share of tourism in gdp is 6. 8 %. adding the indirect contribution to gdp, the share of tourism in gdp is about 10 %. 1 past research suggested that the total contribution of tourism is between 10 % and 20 % of gdp. 2. the industrial sector has performed relatively better compared to the euro area. industrial production in greece has been growing faster than in the euro area since mid - 2016 on average. since january 2020, the decline in industrial production in the euro area was three times higher than in greece. the relative resilience of greek industry is probably related to the fact that greece is not strongly integrated into global value chains as a typical euro area economy. in addition, composition matters. for example, foods and pharmaceuticals have outperformed during the pandemic, supported by robust external demand and low income elasticity. 3. greece had relatively stronger soft indicators compared to the euro area regarding both 3 / 6 bis central bankers'speeches their momentum before the outbreak of the pandemic and their performance over the last months : 1. the economic sentiment indicator plunged due to the pandemic but held better than in the euro area ; it also started off from a higher level. consumer sentiment remains relatively strong at start - of - 2019 levels. the manufacturing pmi decreased more than in the ea, but has already recovered to near - expansion level. 1. greece benefited the most from two ecb decisions. granting a “ pandemic ” waiver to greek government bonds to be used as collateral for eurosystem refinancing operations and the inclusion of ggbs in the pandemic emergency purchase programme ( pepp ) have helped to reduce spreads of greek government debt to pre - crisis levels, thus improving financing conditions for banks and non - financial corporations. nevertheless, the coronavirus pandemic is expected to significantly worsen some of the legacy problems ( the high public debt, the high