of Chrysostomos Tsoufis
A toxic cocktail of inflation and high energy prices, as a result of the Russo-Ukrainian war, threatens the development and the financial system of the Eurozone.
At this juncture, countries with high public debt and high borrowing costs, and therefore Greece, are more vulnerable.
And they are becoming more vulnerable to the apparent change in the policy of the Central Bank with the increase of interest rates. This is one of the main conclusions of the ECB’s Financial Stability Report for May.
Concerning the deficit, our country has entered the burnt zone of countries that are under additional pressure, as a result of which the forecasts are being revised manually. In the same club, Malta, Italy, France, Estonia and Belarus. This is due to the additional costs of dealing with energy accuracy and for some countries the costs of controlling refugee flows as well as equipment.
The Greek debt presents -beyond the second Italian- the greater “sensitivity” to the increase of interest rates of its own amount and the halt of growth caused by the increased borrowing costs.
Greek households, which are also heavily indebted, are also at risk from the increase in interest rates. Their debt as a percentage of GDP is estimated at close to 60% and together with Belgium and Germany are in the third highest risk group. The problem is exacerbated by the cost of servicing this debt which is estimated at 17% which places Greek households in 3rd place behind only Cyprus and the Netherlands.
Greek companies also run a significant risk. Greece together with Italy have the most companies at risk. This fact together with the highest public debt in Europe and the highest index of red loans ranks our country at No. 1 risk position according to index G.
Greek banks, however, face a much lower risk since the percentage of new loans (from 2009 onwards) only 40% provide stable and low interest rates compared to 80% of the European average.
Good news for the real estate market as well. The Greek market is classified outside the countries in which there are increased risks for “bubble” and where the ECB has requested increased supervision. Especially, Greece appears the country with the lowest price increase and the largest debt repayment for housing.
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