EIB analysts warn of impact of war in Ukraine on Greece
The war in Ukraine risks upending the economic recovery of Greece and the European Union, as higher energy prices and trade disruptions could destabilize EU firms already weakened by the pandemic, according to European Investment Bank analysts, while EIB economic models show that rising inflation could push more Europeans under the poverty line.
These are some of the main findings of a new report titled “How Bad is the Ukraine War for the European Recovery?” published this week by the EIB.
“Inflation and higher energy prices pose a new risk to EU firms already weakened by the pandemic. Our models show that in one year, the proportion of firms at the risk of default rises from 10% to 17%,” said EIB Chief Economist Debora Revoltella, whose team authored the report.
Firms in countries closer to Ukraine and Russia, such as Hungary, Poland, Latvia and Lithuania, will feel the pressure.
Companies in Greece, Croatia and Spain will also suffer more than the EU average. In Greece, the EIB’s model sees a 27.6% increase in the share of firms reporting losses.
This is the highest projected increase in the EU and is almost exclusively due to higher energy prices.
Production in some countries, like Lithuania, Greece and Croatia, remains relatively energy-intensive, while Luxembourg’s output relies very little on energy.
The war could lead to a 2.5% increase in the share of the Greek population at risk of poverty, from the 26.87% this figure reached in 2020.
