In 2022, the Greek economy got off to a solid start, with all demanding mechanisms supporting the 2.4% quarterly increase. Despite the rapid rise in prices, private spending emerged as the most important growth driver, perhaps reflecting the influence of strengthening labor market conditions.
Employment increased by 11% year on year in the first half of this year, while the redundancy rate fell to 12.5%, the lowest level since August 2010.
The influence of the Russia-Ukraine crisis on sales prices is most likely to affect this positive trend, but it will not undermine the Greek recovery, at least not soon.
The energy price spike, exacerbated by the war, is now being felt totally, with the headline HICP price jumping by 11.6 % in June, and the highly vulnerable accommodation and transportation components soaring by 31 % and 25 %, respectively.
The 12% yearly rise in the food section is also causing concern since it is likely to disproportionately affect lower-income households.
The burden on low-income employees’ non-refundable earnings is being somewhat countered by an increase in the minimum wage, but domestic consumption is expected to suffer in the second quarter.
Consumer confidence has recently begun to dwindle, with individuals concerned about mounting financial difficulties. An eventual deficit in family expenditures might be offset in part by a robust rebound in global tourist inflows.