A slowdown in the growth rate, soaring inflation, a yawning current account deficit and the suspension of investment plans are the main injuries the Greek economy is set to suffer as a result of the war in Ukraine, analysts tell Kathimerini.
Although they all agree that it is too early to assess the precise economic effects of the war on Greece, there is no doubt they will be heavy, at least in the short term.
The government takes a similar view, with sources saying the finance minister is working on three scenarios: The baseline provides for this year’s gross domestic product to come in one or two percentage points below the budget estimate for 4.5%, while Minister Christos Staikouras said inflation could reach up to 8% in the coming months. The European Central Bank has a baseline scenario for Greek growth at 3.7%, an adverse one at 2.5% and an extreme one for 2.3%, according to last Thursday’s presentation by President Christine Lagarde. Its inflation estimates range from 5.1% to 7.1%.
National Bank of Greece Chief Economist Nikos Magginas sees inflation peaking early in the second quarter and a 25-year record high for most of 2022.
Still, analysts do anticipate a recovery for the GDP from next year: “Ukraine slows down but does not cancel the rebound,” argues Eurobank Chief Economist Tasos Anastasatos. He notes that any delay this year can be covered later on, provided reforms continue and the budget and current account deficits remain under control.
The awakening of Europe as a result of the war and major companies redrafting their investment strategies could in the medium term be to the benefit of the Greek economy: Bank of Greece Chief Economist Dimitris Malliaropoulos argues that the country needs to make the most of this new planning by valued global chains that has security as its top priority.
For now, the government needs to achieve a balancing act, as Magginas describes it, as the pressure on the state budget and on households from the major price hikes is considerable.