The Greeks are worried about a possible recession, but analysts are not worried
Workers protested against the rising cost of living in central Athens earlier this year.
Luisa Gouliamaki | AFP | Getty Images
Nearly four years after Greece celebrated the end of its complicated bailout program, its people are once again worrying about its economic prospects.
Timeless public mood OneGreece – like many EU member states – is vulnerable to rising food and fuel prices, a trend that has been intensified by Russia’s months-long attack on Ukraine.
“Greece is safe, but not safe,” Athens resident Mikhalis Galencianos told CNBC when asked about the prospect of a recession. “I think Greece is more stable now than it was before. I think and I hope that the economically dark days of the past will not return.”
Greece has come through three consecutive bailout programs after the financial crisis, which controversially relied on reforms and years of austerity measures. The Greek economy grew by 1.6% in 2018 and 1.9% in 2019.
However, like the rest of the world, it suffered an economic setback in 2020 and 2021 due to the coronavirus pandemic, and is now facing new economic pressures with one of the highest inflation rates in Europe.
An estimate by the Office for Statistics for Europe indicated that Greece’s headline inflation stood at 10.7% in May, up from 9.1% in April. This is a big change for the common citizens.
A Greek woman in her thirties from Athens who did not wish to be named because of her job told CNBC that she has become more aware of where she spends her money.
“Especially on gas for my car and electricity. While I usually forgot the heater was on a while back, now I’m really tough with myself,” she said.
“We’ve already spent a decade being financially tight and I think it’s disastrous to have to redo this process… I’m mostly afraid of my salary and whether there will be a cut again. Plus, the rents are huge. are higher than they were during the financial crisis, and it has become very difficult to sustain itself,” she said.
According to a report by eKathimerini, fares increased 5% across Greece between the fall of 2020 and the fall of 2021, but fares increased by 17% in parts of Athens.
Meanwhile, according to a European Commission report on 13 June, automotive gas prices and gasoline costs are above the EU average. And the country’s government has set a price cap on wholesale electricity prices in an effort to help both consumers and industry deal with Aakash. -High prices.
Vasilis Vasilios, who left Greece a year ago to work in Iceland, told CNBC: “I’m concerned for the well-being of my family, they will struggle to make a living.”
What next for the euro area?
The broader European outlook is also not looking as bright, and contagion effects are possible.
“While more affected than the US by energy price shocks, we anticipate the euro area economy to enter a recession facing the US,” Berenberg analysts said in a note on Tuesday.
This represents a notable charge in forecasts since the start of the year; At the time, the economic prospects for Europe were thought to be brighter than those of the US, but Russia’s invasion of Ukraine changed that.
“If it weren’t for the potential post-Covid-19 return of summer tourists, the recession would probably have already begun,” Bernberg forecast a GDP contraction of 0.8% for the euro area in 2023.
Unani Relief Remedies
However, analysts are not sounding the alarm for Greece just yet.
AXIA Ventures Group analyst Jonas Floriani said Greece has a high level of savings that will come in handy when the economic situation worsens.
At the same time, Greek banks are in a very strong position in the wake of the global financial crisis, Floriani said, and Athens is getting the largest share of the European Recovery Fund, which will help fund public investment.
More relief measures may be on the way.
Greece is facing one of the highest inflation rates in Europe. The government has given subsidy and is considering more measures.
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Volfango Piccoli, co-chair of the consultancy, said: “As talks about snap polls are underway in Greece, the government is expected to announce more voter-friendly measures to counter the impact of the cost crisis. ” Group Teneo said in a note on Tuesday.
Athens launched a means-tested scheme during last weekend that allows homeowners to apply for an electricity subsidy of up to 600 euros ($634). The second round of the ‘Fuel Pass’ – petrol and diesel Applications have also been announced for subsidies. I can get help.”