Consumer spending in 2020 reminded of capital controls

By George Lampiris

At the levels of the years 2015-2016 -that is the period of capital controls- the total consumption expenditures of households in Greece in 2020, amounted to 116.22 billion euros, recording a decrease of 6.37% as shown by annual data report of FHW GSEVEE on the effects of the health crisis on the Greek economy.

According to the same report, the largest decrease in consumer spending was observed in leisure and culture with -36.4%, in catering-accommodation with -35.4% and in clothing and footwear with -27.4%. At the same time, there were increases in expenditures for food by 4.2%, for alcohol and tobacco by 3.9% and for education by 2.67%.

The investments, as reflected in the report, were the big patient during the period of the health crisis, with a total expenditure of 18.4 billion euros in 2020 and a decrease of 0.84% ​​compared to 2019. In fact, as pointed out to the scientific executives of GSEVEE, last year was the 10th consecutive year, during which the Greek economy was in the process of disinvestment with all the negative effects that this may imply on employment and productivity of the economy.

Hedge to the investments the construction industry

The increase in construction activity observed from 2017 onwards can be considered a positive element for investments, a fact that kept investments from falling further. Contributing to this was the devaluation of the building capital that had become obsolete due to the cessation of construction activity, the increase of inflows from third country residents with the issuance of golden visas and from refugees and asylum seekers, as well as some measures to strengthen the construction industry brought to the table by the government.

Unemployment at the same time continued to de-escalate, something that started in 2016, reaching 16.3% over the past year.

Moreover, after a series of years of balance of goods and services, in 2020 imports and exports of goods and services decreased by 14.57% and 28.07% respectively. Foreign direct investment was also reduced after years of stock growth.

Increased deficit to 12.5 billion in the balance of goods and services

The deficit created in the balance of goods and services from 3.04 billion euros in 2019 increased to 12.5 billion euros in 2020, mainly due to the reduction of income from tourism.

Regarding the deposits of Greeks in banks, based on the data of the report, they gradually increased from 2016 onwards and skyrocketed in 2020. However, the enhanced deposits in banks during the previous year were mainly related to an increase in liquid savings deposits. and face.

In contrast, time deposits have fallen sharply in recent years. Monetary measures and the zero interest rate policy pursued by the ECB in recent years, which serves as a tool for overcoming the crisis, are responsible for this picture. In addition, in 2020, funding increased on the one hand due to general government lending and on the other due to increased funding to the private sector, as measures to support the economy went through the banking system.

In 2021, it was characterized by inflation at the international level, while in Greece it began to appear during the 2nd quarter, with the beginning being made by energy and the consequent transmission to industrial products. Other causes for inflation are disruption of supply chains, as when demand returned there was no supply of goods, increased energy costs and zero ECB interest rates.

Primary production, wholesale and retail perform best in 2021

If one compares 2021 with 2019, there are sectors that in 2021 behaved better than the previous two years, such as primary production, wholesale and retail, professional, scientific and technical activities. In 2021, the real estate management, arts, entertainment and entertainment sectors behaved worse than in the previous two years. A large contraction occurred in the accommodation with a decrease in turnover in 2020 compared to 2019 by 2/3, in the restaurant with a decrease of 37% and in the fuel and lubricant sector of the car with a steady decrease from 2010 onwards.

Strong recessionary blow from the closure of restaurants and shops

In Greece, the recession reached 9.6% in 2020 compared to 2019, a fact that brought Greece to the second place of the countries with the largest recession in the European Union after Spain. In the 2nd quarter of 2020, the biggest recession was observed in our country at the level of -17.2%. The measures that hit GDP the hardest were the closure of entertainment venues, restaurants and shops in March 2020.