Piraeus Bank: Inflation – energy and pandemic will determine the expectations in the economy in the coming months

In 2021 the economic climate index increased to 105.4 mn. and essentially returned to the levels of 2019 (105.6 mn.). However, rising inflation and energy prices that plagued consumers and businesses at the end of 2021, as well as uncertainty over the evolution and impact of the pandemic, will continue to be a determinant of expectations in the coming months, Bank analysts note. Piraeus, in the “Bulletin of Economic Developments in Greece and the World”.

Inflationary pressures of recent months persist, analysts point out, leading to inflation at 1.2% for 2021, while – although still falling – structural inflation follows an upward trend. At the budgetary level, the primary result of the state budget, on a modified cash basis, was 2021 better than the target.

On 19/1 the Greek government proceeded to the first issue of a bond for 2022. With the issuance of a 10-year bond, it raised € 3 billion. with a coupon of 1.75% and a yield of 1.836%, while the issue was exceeded by 5 times with the total offers reaching € 15 billion.

Finally, on 14/1, Fitch kept the country’s credit rating unchanged at “BB”, upgrading the outlook to positive, Piraeus analysts underline.

International developments

In the US, inflation continues to rise to a very high level. Retail sales shrank sharply in December, reflecting the negative impact of very high inflation. The Fed intends to complete the quantitative easing program in March and increase the interest rate at least 3 times by 2022, in order to face the intense inflationary pressures.

In the Eurozone, inflation is also very high. At the same time, the large dispersion of the aggressive “omicron” mutation has led to new restrictions. The ECB has decided to end its emergency PPP quantitative easing program in March.

In China, more data are recorded that reflect a sharp slowdown in growth.