Six out of 10 Greek businesses increased their prices in 2022

The price increases, especially in energy prices, caused three serious and interrelated effects on businesses, as pointed out in the Institute for Small Businesses Annual Report entitled “Crisis, Greek Economy and Small Businesses”, released on Wednesday.

The first impact was the significant increase in their operating costs. In particular, in the first half of 2022 energy costs increased on average by 76%, raw materials and goods supply costs by 43.5%, vehicle fuel costs by 57.8% and equipment and machinery supply costs by 26.2% .

The second impact was the historically high number of businesses that increased the selling prices of goods/services. Based on the economic climate surveys of the Institute, the number of companies that stated that they increased their prices are constantly rising, as from 6.6% that was in the 2nd half of 2020, they reached 23.6% in the 1st half of 2021, in 34 .8% in the 2nd half of 2021 and to 59.2% in the 1st half of 2022.

Liquidity problems

The third impact, related both to the increase in business operating costs and to the effects of the pandemic crisis, concerns the serious liquidity problems experienced by small and very small businesses. The liquidity problem of small and very small businesses is reflected by the increase in the already high percentages of businesses with zero or fairly low cash reserves.

The situation appears to have worsened significantly since the start of the pandemic, as businesses that in July 2022 declared that they had zero cash on hand accounted for 27.8% of all small and very small businesses. Especially for the very small ones, which make up the vast majority of businesses, the serious liquidity problems are more intense, as well as their ability to meet their obligations and escape from the vicious cycle of over-indebtedness.

Economic Climate Index

On the other hand, the Economic Climate Index of small and very small businesses strengthened further, both in the second half of 2021 and the first half of 2022. Specifically, it reached 52.4 and 54.3 points respectively, recording the first half of 2022 the highest performance since the outbreak of the health crisis, without however approaching the pre-pandemic level.

Employment also increased, while the percentage of businesses that made investments also increased. The full opening of the economy, the very good tourist season, the reduction of tax and other burdens and the measures to deal with high energy prices, are considered the main factors of these positive developments.

However, in relation to investments, it appears from the data that they were mainly adaptation or maintenance investments and less expansion or development. In other words, most of the investments were small-scale, since the amount of investment for more than 1 in 2 companies was up to €5,000, while the vast majority of companies (more than 8 in 10) financed the investment they made with equity capital.

Finally, with regard to the digital transformation of small and very small businesses, there is a lag in the integration of new technologies. It is characteristic that of the small and very small businesses that have integrated new technologies into their activity, only 17.4% adopted them during the pandemic.