ECONOMY

Market severely hurt by impact of capital controls

market-severely-hurt-by-impact-of-capital-controls

Ninety days after they were first introduced, capital controls are having a deep impact on the Greek economy, most notably in the manufacturing sector, which faces serious shortages in raw materials, mainly plastics, chemicals, metals and packaging.

In the retail sector, shortages are mainly being seen in apparel as well as in spare parts for vehicles and machinery in general, as these are products given low priority in the import approval process.

The President of the Greek International Business Association (SEVE), Kyriakos Loufakis, expects more manufacturers to shut down by the end of the year, with an adverse effect on unemployment. “The effects will continue to become evident in the coming months,” he told Kathimerini, estimating that exports have gone down in August by more than 10 percent year-on-year.

Worse, in the coming months the market will experience product price hikes due to commissions paid to mediators who secure imports to certain companies.

Kathimerini understands that the third-quarter financial results of listed companies to be released in November will show a major drop in sales, possibly even above 50 percent, because of capital controls imposed in late June.

Furthermore, according to Bank of Greece data, the value of imports in July came to just 47 percent of that recorded in July 2014.