Greek public debt has significantly increased since last year reaching 193 percent of the country's GDP. Inflation for June was 11.6 percent, up fr
Greek public debt has significantly increased since last year reaching 193 percent of the country’s GDP. Inflation for June was 11.6 percent, up from 10.5 percent in May last year.
According to data from the Greek Statistical Service (ELSTAT), public debt increased by €13.417 billion (£11.4 bn) between Q1 2021 and Q2 2022.
Public debt is now expected to exceed €357 billion (£303 bn).
The worrying figure has alerted experts, warning another collapse of the Greek economy could bring the whole eurozone down.
And with Italy’s political crisis looming on its economy, economists have warned of possible bankruptcy.
Stefan Legge, an economics lecturer at the University of St.Gallen in Switzerland told EURACTIV: “The fear is back that Italy or Greece or some other countries will not be able to afford higher levels of interest and could eventually go bankrupt.”
After Mario Draghi’s resignation, a snap election has been set for Italy on September 25.
Rumours of a snap elections are also going around in Greece as soaring energy, food and fuel prices are costing the government a lot of criticism.
Greek Prime Minister Kyriakos Mitsotakis, elected in 2019, dismissed such calls.
He told Skai radio: “I’m not looking at opinion polls for a clearing to call elections.
“We have a government with a strong majority, and it’s my obligation to secure the country’s stability.”
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The euro also continued its retreat from a more-than-two-week high as disappointing activity data from France and Germany pushed the single currency lower, a day after the European Central Bank highlighted the path for interest rates would be data dependent.
German business activity unexpectedly shrank in July while French manufacturing activity contracted and growth in services slowed, preliminary purchasing managers’ (PMI) surveys showed.
Analysts said the eurozone economy appeared to be heading towards a recession.
The euro was already softer, even after the ECB raised rates by a more-than-forecast 50 basis points (bps) on Thursday, as its new tool to shield highly indebted states from soaring borrowing costs failed to impress investors.
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Analysts also said the removal of the ECB’s forward guidance on rates and the move to a meeting-by-meeting, data dependent stance gives the central bank a small window of opportunity for further tightening.
Viraj Patel, macro strategist at Vanda Research said: “Maybe the ECB can eke out another hike in September but judging by the direction of travel for the European economy I don’t think they’ll be in any shape or form to be talking about rate hikes in December or early next year.”
Traders are now pricing in under 110 bps of ECB rate hikes by December, down from around 120 bps before the data.