Minister: war in Ukraine will cost Greece at least 1% of GDP growth

A war in Ukraine will cost the Greek economy as much as at least 1 percentage point growthforecasts Deputy Finance Minister Theodoros Skilakakis, speaking at the OT Forum on Wednesday.

The maximum cost of these losses cannot be accurately calculated as no one knows when the fighting will end, he said, adding that the threat of war in Ukraine in 2021 has led to a 0.3% slowdown in GDP growth, meaning that annual GDP growth, instead of the planned 8 ,6-8.7%, can be no more than 8.3%*. Skylakakis also mentioned the increased uncertainty in the economy, which has created a fragile environment due to the war.

Implications for tourism are not yet knownwhile the investment climate may also be affected, although this is not yet clear.

A day earlier, in an interview with the SKAI TV channel, Theodoros Skilakakis said that the key factor in the Greek economy and rising prices is the war in Ukraine. “The key factor will be war. In international products, stock markets made allowances for the war months before the Russian invasion,” he told SKAI, adding that this is why citizens have seen their gas/electricity bills increase. “Now some are promising a long war. And Russia and Ukraine are major grain producers,” he added.

As long as there is a war, production will constantly increase

He was then asked if prices would rise continuously during the war. “We will see pressure on inflation, mainly on electricity, and we are trying to reduce the increase in prices, because there is a significant increase,” he said. He also noted that the key to rising prices at the moment are the prices of natural gas, which from 25 euros per 100 m3 rose today to 150 euros.

“Each additional 10 euros to the price is 600 million euros to the detriment of the Greek economy. This hits all electricity bills that are based on natural gas,” he said. “I can’t give exact data on growth rates, I will announce them in April. But certainly the growth rate is limited to at least 1 point due to the war, depending on the duration.”

For wheat, he said, the price has also risen sharply: “From about 600 euros in international prices, it has risen to 1,000. Oil is in a slightly better condition. Over time, the highest price reached in 2014 was around 130 euros per barrel. Then it was between 60-80 euros over the past years, fell even more during the pandemic and is now around 110 euros.”

As for the fuel, he said that it was all imported. “This means that in a period of high prices, we prefer to give money to the most vulnerable, rather than subsidize imports. If there is a tax cut, it will affect the most vulnerable more,” he said.

* It is not clear where the figure of 8.3% GDP growth came from, if earlier he said that this year GDP growth would be limited to a maximum of 1%. However, these figures are most likely from the same opera as “a powerful growth in the welfare of the population and a decrease in unemployment by 4.4%.” At the same time, the national debt of Greece at the beginning of 2022 made up 421 billion US dollars, or 193.% of the country’s GDP (there is preliminary information that by April 1 it will grow by another 10 billion). The only good thing is that inflation at least 8.5% reduces this amount in proportion to the depreciation of the euro.

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