June 10, 2023

Athens News

News in English from Greece

Inflation takes a heavy toll on the Greek economy

The impact of inflation on the Greek economy and society is becoming more severe, with households seeing a sharp decline in their real incomes and fearing unemployment in a new cycle of recession, while corporations are seeing their profits fall due to higher production and operating costs and lower sales volumes.

Worse, this is not a temporary phenomenon, as the Foundation for Economic and Industrial Research (IOBE) notes in its latest Economic Review released Tuesday: the impact on prices will not ease in the coming months,” the Athens-based think tank concluded.

Thus, the index of economic sentiment in April fell to a 12-month low of 105 points from 112.1 in March.

Greek consumers are the most pessimistic in the European Union given the previous decade’s financial crisis, and their confidence level has returned to the bailout era of 2015-2018. The confidence index fell to negative 55.3 in April from -51.4 in March, well below the -38.4 in April 2021.

IOBE found that instability has returned to the minds of the population, and intentions to make large purchases have significantly decreased as energy, transport and food costs have risen. At the same time, the proportion of consumers who say that they “barely make ends meet” rose from 56% in March to 65% in April.

Key sectors of the economy are also feeling the negative impact as demand falls and costs rise. Latest data from Hellenic Statistical Office (ELSTAT) show that building materials prices jumped 10.2%, while construction business expectations fell to 132.2 in April from 144.1 in March.

Retail expectations fell to 85 points for the fourth month, while NielsenIQ data showed a 1.4% annual decline in supermarket turnover in the first quarter of 2022. In terms of industrial production, S&P Global forecasts growth of only 1.4% this year.

This trend in Greece has further intensified against the background of the refusal to purchase Russian gas and oil, which in the near future may send the country’s economy into a tailspin if the hope for tourism is not realized.

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