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How the War in Ukraine Affects the Greek Economy

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Gas station in Lefkas. Gas prices skyrocketed following war in Ukraine. Credit: Alf Van Beem/Wikimedia Commons CC0

The impact of the war in Ukraine on the Greek economy, particularly on energy, tourism and raw materials has alarmed households and the government alike.

The rapid increase in energy costs, the certain decrease in tourist arrivals and borrowing from international markets are difficult issues the government has to resolve.

Greek households turn to the state for solutions that seem unlikely, given the unpredictability regarding the duration or outcome of the Ukraine armed conflict and the further impact on Greek economy.

At the same time, Greek companies that export furs, fruits, vegetables, fresh goods, also specialized technology systems to Russia and Ukraine have the biggest impact due to the crisis between the two countries.

Oil and natural gas

In the past two months Greeks saw their electricity bills almost triple due to the international high increase on energy.

At the same time they saw prices at the gas pump go up by 20-25 percent, with the same applying to heating fuel.

For Greece, Russia represents 26 percent of oil imports and 39 percent of natural gas imports, according to the Ministry of Finance.

It is a country with a relatively high dependence on Russian gas but not as high as e.g. Germany, which is 80 percent dependent.

The Ministry of Finance estimates that for every $10 increase in the international price of natural gas, the Greece’s GDP is hit by €600 million.

Impact on tourism

Tourism revenues from Russia estimated at € 433 million last year will definitely drop, at a rate that is yet unknown, depending on the course of the war.

In 2019, Greece welcomed more than 500,000 Russian travelers, while last year almost 120,000 Russian tourists stayed in Greek resorts. In any case, the blow will be comparatively greater for the tourist destinations of Northern Greece.

Also the rising inflation in Greek economy — and Europe as well — because of the war in Ukraine will reduce the disposable income of European citizens, and this must be taken into account in regards to tourism this summer.

Imports and exports

Greek companies that import grains from the two countries, mainly flour, face a big problem, as it is known that Russia and Ukraine are considered the “granary of Europe.”

The flour and animal feed industries are now looking for alternative suppliers of grain and corn, mainly in Romania and Poland.

Russia’s exclusion from the SWIFT system is already a concern for several Greek exporting companies — and some importing — that do business in Russia. With Ukraine, all imports and exports have stopped completely at the moment.

Greece’s exports is small to the two countries at war, as of the € 40 billion of total exports annually, exports to Russia amount to about € 218 million and to Ukraine το € 238 million.

However, some export companies that do business with these two countries are deeply concerned because for them the blow is great.

It appears the impact on the Greek economy the war in Ukraine has is not as hard in the imports-exports sector.

Speaking to, president of the Greek Exporters Association (SEVE), Georgios Konstantopoulos, stressed that, “Our products have a European stamp and are exported all over the world, mainly to the European Union and NATO countries.”

Borrowing is hard

The Greek government is seeking fiscal measures to subsidize low-income Greek households that have been hit the hardest by inflation.

Lending rates are prohibitive at the moment. According to Finance Minister Christos Staikouras who spoke on SKAI 100.3 radio, the government was planning to borrow € 12 billion this year.

Greece managed to raise about € 3 billion in January at a 1.83 percent interest rate. For the remaining € 9 billion, it has to wait as the interest rate for the 10-year bond is in the range of 2.5 – 2.7 percent.

Experts say that it is relatively early to estimate the full impact on the Greek economy the invasion of Ukraine will have.

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