ECONOMY

Market expects product shortages in September due to import drop

market-expects-product-shortages-in-september-due-to-import-drop

The local market is expecting to face shortages this September in all sectors except for food and drugs, as the lack of raw materials, or their slow rate of import, is hampering production.

Although the situation after the recent easing of capital controls has improved compared to the first few weeks of July, raw material imports continue at a very slow pace, with entrepreneurs saying that “the damage is already done and we are just trying to minimize the consequences.”

The problem for local industries is even bigger because of the fact that the foreign companies which supply them usually shut down or slow down work in August. At the same time, Greek enterprises, 50 percent of which forced their staff to take leave in July because business was slow, will have to operate as normal in August.

The numbers show clearly why the absence of raw materials will create shortages in the local market. Greece is self-sufficient in raw materials by just 20 percent and has to import goods that cost on average 3.5 billion euros per month. The increase to the international payment approval limit to 100,000 euros for last week meant that the daily amount of imports made reached 20 million euros, against 14 million euros before that measure.

At that rate the value of imports will drop to just half a billion euros per month and cannot reach a total of 1 billion euros even after adding the special approvals by the Banking Transaction Approval Committee of the State General Accounting Office and the imports covered by funds that Greek importers have in foreign banks.

The president of the Greek International Business Association (SEVE), Kyriakos Loufakis, told Kathimerini that imports in July are estimated to have reached just about half of their amount in July 2014, when according to the Hellenic Statistical Authority they had come to 4.3 billion euros. At the same time exports may well post a decrease that will be above 10 percent.

Even if the capital controls were to be lifted now, the remaining businesses would have to redraft their strategy on the basis that a major part of their turnover has been lost, exceeding 40 percent in most cases.