Foundation for Economic & Industrial Research (IOBE): Significant rise in gas costs affects Greek industry

The recovery of the Greek economy weakened in the fourth quarter of 2021, however it remained strong, while a significant increase in exports of services and private consumption was recorded again, as reported by IOBE in the Bulletin of Industrial Developments (March 2022). As for the economic climate in February, it remained stable while consumer confidence improved.

GDP growth was strong in the fourth quarter of 2021, at 7.7%, after a recovery of 11.4% in the third quarter. Overall in 2021 the average GDP growth rate was 8.3%, compared to a decrease of 9.0% the year before.

Regarding the cost of natural gas, IOBE speaks of a significant increase, as its price in Greece strengthened in March 2021 in contrast to the trend in a key European market. Also, the average price of CO2 emission allowances (EU Allowance) increased in February, continuing the strong upward trend (+ 267%) in the last 16 months.

There was a significant increase in investments, but also a widening deficit in the external sector, as well as a larger increase in fixed investments in the fourth quarter (+ 24.1%, from + 19.3% in the third quarter), compared to a fall of 12.5% ​​before a year. The increase came almost exclusively from the rise in the category ‘mechanical equipment-defense systems’ (+ 99.4%, from + 25.5%), while the smallest increase was recorded in ‘ICT Equipment’ (+ 11.2% from + 6.0% ) and ‘Other Investments’ (+ 5.8% from + 14.4%).

Exports increased by 24.1% in the fourth quarter of 2021, with an increase mainly in exports of services (+ 63.2%) and more mildly in exports of goods (+ 4.1%).

The IOBE Bulletin also highlights the following:
• Decline in industrial production by 4.1% in January compared to December. Marginal increase of 0.3% (y-o-y) in Greece, compared to an increase of 0.9% in the EU27.

• New growth of industry exports 13.1% in December (y-o-y). Trade deficit increase to € 3.3 billion, from € 2.0 billion a year ago.

• Slight decline, after continuous upward trends, of electricity costs in January, by 4.6% compared to the previous month. It remains at higher levels than other European markets.

• Increase of the industry turnover index by 31.8% in the fourth quarter of 2021 (y-o-y) in Greece compared to 14.2% in the EU27. In the whole of 2021, the domestic index increased by 8.6% compared to the same increase in the EU27.

• Increase in activity for all sectors of the economy in 2021 compared to a year ago. Manufacturing among the sectors with the strongest increase (26.8%), higher than the total activities (21.1%).