The impact of the US-Israeli conflict with Iran on the Greek economy could be very significant if the escalation is prolonged, as inflation could increase significantly and growth would slow down, economists and analysts told Kathimerini.
As Bank of Greece Governor Yannis Stournaras said, everything will depend on the duration of the conflict, while what is certain is that military involvement is a shock on the supply side. Even greater effects could arise from a prolonged suspension of maritime traffic through the Strait of Hormuz.
Much will depend on the duration and intensity of the conflict. “The intensity of the impact on the Greek economy will depend on the duration and intensity of the military engagement and especially if other countries are involved,” Stournaras noted to Kathimerini. “Like any military engagement that has affected the flow of oil, this one is a shock on the supply side, where the short-term results are the rise in prices and the reduction in trade and production,” the head of the Bank of Greece pointed out.
“For now, we cannot say anything more since there is very great uncertainty about the duration of the engagement,” Stournaras stressed. He added that “it is too early to say what impact the developments may have on monetary policy.”
As Nikos Magginas, chief National Bank economist, said, “in our baseline scenario where the turmoil lasts for a few weeks and a kind of truce is achieved, the effects on the Greek economy will be very limited – although the possible period of turmoil could approach the Easter period.” However, he added, in an environment of successive shocks and surprises, a high degree of alertness is required.
If effects are prolonged, the impact on GDP and the economy will certainly be intense. “A significant increase in energy prices should be considered almost certain to have an upward impact on inflation and is very likely to moderate the growth rate to close to 1.5%,” Piraeus Bank Chief Economist Elias Lekkos told Kathimerini.