Worry Grows in Greece of Recession Again, Dark Days Return

ATHENS – The COVID-19 pandemic’s in its third year, inflation is at its highest since 1993, electricity bills have doubled, gas is nearing $10 a gallon, energy prices soaring, food costs up – Greeks are now anxious there could be a recession.

Eight years of 326 billion euros ($344.3 billion) in three international bailouts that came with punishing austerity measures ended on Aug. 20, 2018 and surveillance by the creditors is ending too.

But the specter of a besieged economy, despite hordes of tourists pouring in after health measures were essentially ended, has Greeks anxious that they could be looking at tough times again.

Russia’s invasion of Ukraine roiled international grain and other markets and caused a ripple effect driving up energy costs so much that Greeks are more worried about their pocketbooks than anything else.

“Greece is safer but not safe,” Michalis Galenianos, an Athens resident, told CNBC when asked about the prospect of a recession. “I think Greece is more stable now than what it used to be. I think and I hope that the financially dark days of the past won’t come back.”

The economy contracted some 25 percent during the bailout years but had begun to rebound slowly before COVID hit and Prime Minister Kyriakos Mitsotakis’ New Democracy government is trying to lure investors, especially in the high-tech fields.

The ecomomy grew 1.6 percent in 2018 with the bailouts end and 1.9 percent in 2019, bolstered by record tourism years and while the visitors are back and spending big it may not be enough to offset other troubling factors.

COVID lockdowns and the near-halting of international air traffic cut deep into the economy and required the government in 2020 to put up 17.5 billion euros ($18.48 billion) in subsidies for laid-off workers and shut-down businesses.

A Greek woman from Athens in her 30’s, who did not want to be named due to her job, told CNBC she has become more conscious about where she spends her money.


“Especially on gas for my car and electricity. While I would normally forget the heater is on for some time before, now I have become really strict with myself,” she said, people turning to self-austerity measures.

“We’ve already spent a decade being really tight financially and I think it is devastating to go through this procedure again … I am mostly afraid of my salary and whether there will be any cuts again. At the same time, the rents are very high while during the financial crisis they were not, and it has become very hard to sustain myself,” she added.

The worry is at odds, however, with government, European Union and Bank of Greece data and predictions that economy is on track to come back slowly and growing interest by investors and luxury resort operators.

Kathimerini said that rents rose 5-17 percent in Athens, depending on the favorability of neighborhoods and also driven up by the return of short-term rentals such as Airbnb that stopped at the height of the pandemic.

According to a report by eKathimerini, rents across Greece rose by 5% between the fall of 2020 and the fall of 2021, but in some parts of Athens,

“I am worried for the wellbeing of my family, they will struggle to make ends meet,” Vassilis Vasileios, who left Greece a year ago to work in Iceland, told CNBC.

A saving grace in Greece is the high level of home ownership outright – aboug 75 percent – which means no mortgage to pay and the country is also getting 32 billion euros ($33.8 billion) in EU loans and subsidies.

There’s been no report where that’s gone apart from unknown amounts being diverted to help create a 5G Internet as connections can be spotty in Greece, which is trying to attract more rich and also digital nomads who can work from anywhere.

Greeks also have a high level of savings which offsets economic shocks but even the talk of a recession is bad news for Mitsotakis who faces re-election in 2023 – or sooner if he calls snap polls – with the major opposition SYRIZA leader and former premier Alexis Tsipras, whom he dethroned, sniping at him.


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