Toll of Daniel on the economy

Thessaly producers are suffering, but national GDP is not expected to sink under water

Toll of Daniel on the economy

Almost two weeks after the catastrophe wreaked by Daniel, the government and economists are still struggling to come up with an estimate of the extent of the damage.

That is not only because a full record has not been made of that lost forever under the waters, but also because it is not certain to what extent the fields will be cultivated again, if the production units that were destroyed will reopen, if the flood victims will return to their homes, and even whether the products will again find their place in foreign markets.

With 2.85 billion euros so far available, including €600 million from the supplementary budget to cover household first aid and business compensation advances and €2.25 billion expected from Brussels this year and in 2024, the state has good firepower to start the rollback effort.

In addition, the 2024 budget will be bolstered by an additional resource from a special natural disaster levy. However, roads, railways, sewage networks, anti-flood and anti-erosion works will need to be designed correctly and quickly to secure EU funding, and these are not performances we are used to by the Greek state.

In the overall economy, the blow to Thessaly, which represents 5.2% of GDP and 14.1% of agricultural production, is estimated to be manageable, according to economists. In other words, it will not divert the country into a situation that it will not be able to deal with, even if the images of the plain submerged – still – cause despair.

However, there are concerns about the effects, mainly on inflation, as has already been seen, on GDP and on the balance sheet. The forecast for 2023 overall will not change drastically for the worse, as the deterioration only concerns its final months, but there are concerns for 2024 as well.

“It is not a catastrophe that will significantly throw off our forecasts, but it causes a negative impact on GDP and, more importantly, inflation and the balance sheet,” comments Bank of Greece chief economist Dimitris Malliaropoulos. He estimates that in the fourth quarter growth will be around 1% due to Thessaly.

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