Greek economy: worst position since 2015 and tough times ahead

The disaster in Thessaly is not “another natural disaster” for Greece. At a critical moment for the economy, primary production, which had already collapsed by 20% in previous years, now tends to minus 40%, as a result of not only the destruction of current production, but also the destruction of soil quality and its productive capacity, at least for the next 2 years. 3 years!

At an accounting level, the emergency costs associated with the floods in Thessaly absorb almost all of the €1.8 billion excess tax revenue for the eight months from January to August, and of course this does not include major disasters caused by fires, again in Thessaly, Thrace, Rhodes, Attica and other parts of Greece.

In the coming months, the Ministry of National Economy and Finance estimates that revenues will be negatively affected by the forced deferment of tax obligations of residents of Rhodes, Corfu, Evros and Thessaly.

A second supplementary budget of €600 million, to be presented in the coming days, will cover the first €1 billion of aid for flood victims in Thessaly, supported by €400 million in community funds.

The amount of additional costs already amounts to 1.7 billion euros (community funds are neutral costs) out of 1.8 billion euros exceeding the eight-month period, and at the end of the market the subsidies are carried over until the end of the year, with the exception of residents of Thessaly.

And the question remains whether the low VAT will ultimately be extended for catering, tourism, transport, theaters, cinemas, dance schools and gyms.

Prime Minister Kyriakos Mitsotakis did not mention the measure from Thessaloniki because its implementation requires additional costs of 250 million euros, which are expected to be incurred before the end of the year. According to forecasts, the likelihood of this is extremely low.

Talk about a “primary surplus” of 0.7% of GDP, “upgrading the country’s rating to investment grade by DBRS and a double rating upgrade by Moody’s,” which, however, again did not give investment grade, are “drops in the rain,” to say the least “drops in the flood” The shortage of food and energy resources “explodes” what is left in the economy for the survival of 60% of citizens belonging to the economically weaker sections of the population.

Today, a 2002 Smart car with a volume of 700 cc. m, to fill up at a gas station at a price of 1,923 euros per liter, you need… 83 euros! The price of oil is approaching $100 per barrel every day, which is associated with sanctions against Russia and retaliatory measures by the anti-Russian group (all oil-producing countries except the West and Nigeria) and has led to a decrease in US oil reserves to a ten-year low.

With the abolition of the market pass and horizontal subsidies for electricity, a sharp increase in pressure on low and middle incomes of the population is expected.

At the capital market, the overall index is down 8.57% and at the banking level by almost 14%, just ahead of Optima Bank’s listing and the worst month of 2023 so far.

The market burned off pre-election gains and closed at a new 4-month low at levels seen on May 24, three days after the first election, which positively surprised investors after New Democracy’s unexpected victory over Syriza exceeded 20%.

And all this is happening at a time when the country, after 13 years of being in the “junk” category, received an investment grade rating, albeit from a “secondary” home – Canada’s DBRS.

On September 21, the exchange closed at 1200.04 points with a slight decrease of 0.02%, having passed an intraday path from a maximum of 1205.42 points (+0.43%) to a minimum of 1182.89 points (-1.45%).

What this all points to: a very difficult autumn and winter, which may bring unexpected turns and accelerated developments that no one predicted after the June elections…

And the psychology that is getting worse and worse in society: the massacre of 5 dead in Libya has shown that even the armed forces, at least under the current leadership, are “retreating”, and this is now visible in the government, and they are worried.

They thought that for the present government, in the absence of SYRIZA, the military sphere is a privileged area of ​​action. The tragic management of the mission in Libya, which followed the explosion of the 111 IAP warehouse in Anchialos and the flood in Stefanovikiyo, showed that the Armed Forces also urgently need “reform” and new leadership…

And the expected election of Kasselakis on Sunday will make political times extremely busy for Mitsotakis…

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