Greek tourism expected to combat effect of inflation

Thursday, July 14, 2022

This year, the Greek economy started with a strong foothold, with all demand mechanisms providing an optimistic involvement in the 2.4% quarterly growth. In spite of the quick increase in inflation, private expenditure turned to be the most prevailing growth driver, probably echoing the effect of improving labour market conditions. In the first part of this year, employment went up 11% Y-o-Y and the redundancy rate dropped to 12.5%, which is the lowest possible level since August 2010.

The Russia-Ukraine conflict’s effect on product prices is most likely to affect this constructive pattern but it won’t disrupt the Greek revival, at least in the immediately. The energy price blow, augmented by the conflict, is now being witnessed completely, with headline HICP price rises at 11.6% in June, and the much-exposed accommodation and conveyance components at 31% and 25%, in that order. The 12% annual increase of the food section is also a cause of anxiety, since it is expected to affect lower-income homes especially bad.

Load on low earners’ non-refundable earnings is being partially compensated by a rise in the minimum pay, but domestic expenditure, nonetheless, is anticipated to undergo problems in the second quarter. Consumer self-belief of late started to drop again, with people sad about rising finance pressures. An eventual deficit from the household expenditure front could be at any rate partly remunerated by a strong revival of global tourist inflows.

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