Workers demonstrate against the rising cost of living in central Athens earlier this year.
Luisa Golyamaki | Afp | Getty Images
Nearly four years after Greece celebrated the end of its complex bailout programme, its people are growing worried about their economic prospects once again.
Dark mood comes aGreece – like many EU member states – is suffering from rising food and fuel prices, a trend exacerbated by Russia’s months-long offensive on Ukraine.
“Greece is safer but not safe,” Athens resident Michalis Galenianos told CNBC, when asked about the possibility of a recession. “I think Greece is more stable now than it used to be. I think and hope the financially dark days will not be back in the past.”
Greece went through three consecutive bailouts after the financial crisis, which was, arguably, dependent on a slew of reforms and years of austerity measures. Then the Greek economy expanded 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.
‘I am worried’
The European Statistical Office estimated that headline inflation in Greece came in at 10.7% in May, up from 9.1% in April. For ordinary citizens, this is a big change.
A Greek woman from Athens in her 30s, who didn’t want to be named because of her job, told CNBC that she’s becoming more aware of where she’s spending her money.
“Especially with regards to my car’s gas and electricity. While I usually forget the heater has been on for a while before, I’m now strict with myself,” she said.
“We’ve already had a decade of really financial tightness and I think it’s devastating to do that again… I’m mostly afraid of my salary and whether there will be any cuts again. Meanwhile, rents are pretty high while during the financial crisis She wasn’t, and it became very difficult to support myself.”
According to a report by eKathimerini, rents across Greece rose by 5% between fall 2020 and fall 2021, but in some parts of Athens, rents rose by 17%.
Meanwhile, car gas prices and gasoline costs are above the EU average, according to a European Commission report released on June 13. The country’s government has set a price cap on wholesale electricity prices in an effort to help consumers and industry alike – rising costs.
“I worry about my family’s well-being, and they will struggle to make ends meet,” Vasilis Vasilius, who left Greece a year ago to work in Iceland, told CNBC.
What comes after the eurozone?
The broader European view also does not look bright, and traces of infection are possible.
“Hard hit by the US energy price shock, we expect the eurozone economy to enter recession before the US,” analysts at Berenberg said in a note on Tuesday.
This represents a notable cost in forecasts since the beginning of the year; At the time, Europe’s economic prospects were believed to be brighter than that of the United States, but Russia’s invasion of Ukraine changed that.
“Had it not been for the potential return of summer tourists after COVID-19, the recession would probably have already begun,” Breenberg added, forecasting a 0.8% GDP contraction for the eurozone in 2023.
Greek relief measures
However, analysts are not sounding the alarm for Greece yet.
Jonas Floriani, an analyst at AXIA Ventures Group, said Greece has a high level of savings that will come in handy if the economic situation worsens.
Meanwhile, Greek banks are in a much stronger position than in the wake of the global financial crisis, Floriani said, and Athens is receiving the bulk of European recovery funds, which will help with public investment.
And more relief measures could be on the way.
Greece faces one of the highest inflation rates in Europe. The government has provided subsidies and is considering further measures.
Xinhua News Agency | Xinhua News Agency | Getty Images
“As talk of opinion polls is going well in Greece, the government is expected to announce more voter-friendly measures in an effort to counter the impact of the cost-of-living crisis,” Wolfango Piccoli, co-chair of the consulting firm Teneo Group said in a Tuesday note.
“Athens last weekend launched a means-tested scheme allowing homeowners to apply for electricity subsidies of up to 600 euros ($634). A second round of ‘fuel permits’ – petrol and diesel subsidies – has also been announced and the government is also considering” Another inflation check “is similar to the 200-euro grant many Greeks received before Easter to help families deal with rising prices.”