ATHENS – Prime Minister Kyriakos Mitsotakis’ New Democracy government has set out three scenarios over how Russia’s invasion of Ukraine will affect the economy as it ripples around the world, driving up energy prices.
The war struck just as the COVID-19 pandemic was beginning to wane, although it’s now shown another bump up, with Mitsotakis hoping to speed a recovery from the health crisis and lure tourists back in big numbers.
The first outlook, said Kathimerini in a report on the inner dealings of his advisors projecting the effect, would be the most favorable if the war stopped before the end of March.
It would be less optimistic if it continued to Easter near the end of April and worst if Russian President Vladimir Putin’s forces are still trying to crush Ukrainian resistance in June or the summer.
The best case scenario, with the war ending this month, would mean the government could ride out the added costs to society of energy price jumping, absorbing 1.1 billion euros ($1.21 billio) in aid with a revenue surplus.
That time period would have a psychological benefit as the government expects that would restore confidence in traveling internationally and let tourists make plans to come to Greece, and that energy costs would fall back.
If the war goes into the summer that would be chilling as it could see tourists reluctant to travel or the cost of flying becoming too expensive for many as a result of higher energy and fuel prices.
That would also mean the government, which is providing subsidies for energy and fuel costs, would have to reach back into the state coffers and could affect any revenue surplus, or deficit.
The government is still paying off what’s left of 326 billion euros ($358.62 billion) in three international bailouts that ended in August, 2018 and a longer war could cut into the economy so much that there could be a rethinking of ending a solidarity tax as planned in January, 2023, the report said.