Greece: In the vortex of inflation and the energy crisis

Inflation has created an explosive mix for the economies of the Eurozone and Greece in particular. Rising fuel prices are pushing up the cost of energy, which in turn is driving up commodity prices. Energy costs, rising transport costs and rising raw materials prices are three of the factors that have led to rising commodity prices. Businesses cannot absorb these costs and pass them on to consumers. This creates an urgent need for the EU and the Greek government to draft a plan that will protect households and businesses without derailing the budget and aim for 2022 to be another year of growth.

In the energy sector, due to the state of emergency, the Greek government decided to include the lignite plants that had been closed in order to stop the price increase. As stated by the President of the Commission, the purpose of the EU is to become independent from gas, oil and coal. To achieve this, Europe will rely on three pillars: large investments in renewable energy projects, finding reliable suppliers of liquefied natural gas, improving energy efficiency through e.g. the renovation of buildings, the smart industrial processes, the artificial intelligence, the efficient management of the smart energy networks. This plan has a medium-term implementation time and at the moment, as noted at the EU summit, the immediate goal is to support vulnerable citizens and businesses. The Greek government based on the above decisions voted for he extension of the electricity subsidy in the second quarter of 2022 by increasing the subsidy for the economically weaker citizens and businesses.

In the fuel sector, the financial staff plan includes three interventions:

a)        the first concerns the subsidization of liters of crude oil sold by fuel importers and refineries to fuel trading companies and industrial customers as well as the return of a specific amount of allowance to professional taxi drivers.

b)      the second intervention concerns a gas subsidy for households and businesses.

c)       and third is the possibility of issuing a fuel discount card for every citizen who owns a vehicle.

The Greek government acknowledged that all price increases could not be absorbed through the interventions it voted on, but given the unpredictable duration of price increases, it must act moderately in order to be able to support the economy in the future.

Apart from the state of the economy, the situation in the pandemic is also critical as there is still a high number of cases and deaths per day. On the positive side, of course, in relation to the high number of cases, there is no increase in hospitalizations and intubations. According to experts, this is an indication that we are entering the endemic phase gradually. By the end of April, important decisions are expected from the committee of infectious disease specialists in relation to the sanitary measures and the vaccinations.

It is more necessary than ever for Greece to lead to the opening of the summer tourist season with the best possible health conditions so as not to affect the performance of tourism in a particularly critical year.