Fitch Solutions: How resilient is Greece to an energy shock?

Greece ranks among the European economies astir exposed to a imaginable caller vigor shock, Fitch Solutions warned, with the country’s precocious stock of earthy state successful powerfulness procreation amplifying its vulnerability successful the lawsuit of an escalation successful the Middle East.

As highlighted successful a webinar hosted by Fitch Solutions’ BMI Research unit and attended by Naftemporiki, the trajectory of the situation will find whether the interaction connected maturation remains manageable oregon leads to a much pronounced slowdown, within a European situation that is already decelerating. Responding to a question from Naftemporiki regarding the implications of an adverse script and argumentation priorities, Adrian Terzic, Associate Director for Europe Country Risk astatine BMI, underscored that Greece is among the astir exposed economies successful Europe to an vigor shock.

“Greece is astir apt amongst the countries successful Europe with the highest earthy state arsenic portion of its energy share. I think successful terms of conscionable wide vulnerability to higher commodity prices, Greece is adjacent the top there. And that’s truly down to the information that a ample portion of concern accumulation successful Greece, I think astir 30%, is accumulation of energy and vigor products.

And so higher lipid prices, but besides higher earthy state prices something that will beryllium rather antagonistic for the Greek system and is why under an escalatory script we would expect to spot rather a sharper simplification successful Greek maturation rates.”

In terms of policies to antagonistic such a squeeze, helium stated that “it’s rather hard for us to speak connected policy, but I think astatine the infinitesimal we want— we It’ll beryllium hard to truly trim this conscionable due to the fact that a batch of these problems are structural, and it truly comes down to the way the Greek system is structured.”

At the aforesaid time, helium acknowledged that the country’s fiscal presumption has improved importantly successful caller years. As helium noted, Greece is among the countries that person fortified their fiscal position, and so it would decidedly beryllium among the countries that would beryllium capable to prevention oregon divert a batch much of those funds towards keeping vigor prices down for lower.

However, this fiscal space is not unlimited. The effectiveness of such interventions depends to a ample grade connected the duration of the crisis, arsenic successful a prolonged daze the outgo of support increases and the resilience of state budgets are tested.