The global disruption caused by the US president’s aggressive policy Donald Trump It does not leave Greece indifferent. And this is because on the occasion of trade war Crisis was created in stock markets and bond markets, while at the same time the coins of the coins are highly volatile.
After freezing of duties for 90 days Things seem a little bit to calm down, but the worry remains. On the one hand, it is difficult to measure precisely the impact on economies, businesses and markets, and on the other because the combination of trade war with the colossal geopolitical change caused by the Trump policy necessarily alter all balances, economic and political.
In the globalized economy, major changes such as those that Trump wants to impose on international trade, affect all countries. Although the Greek exports In the US is of little total value, the Greek economy is very exposed to international developments, on the one hand, because of its dependence on tourism And, on the other hand, because of the very high loan needs of the country to refinance its loans.
This means that the upheavals in the international bond market, which have already been observed in the previous days, if they continue and worsen, will negatively affect Greece’s borrowing costs. The impact will also be negative about the restriction of the movement of international investment capital, if the market turbulence has been maintained for a long time. Even worse things will happen if the American and the European economy are led to recession.
The worst scenario is linked to a US credibility crisis, which, if ultimately deepened, will cause huge imbalances in all markets.
So far, what seems to be that the impact on the Greek economy by Trump politics will depend mainly on the Course of European Economydevelopments in bond markets and coins rather than exports of Greek products to the US.
The products
The export In the US in the US are limited and have some protective peculiarities. For example, Greek wine is sold in restaurants only and at extremely high prices, and exporters believe that it will make no difference to the price for well -off customers. The Greek oil and the olives They would have a problem if the EU duty It was 20%, while in Turkey and Morocco is 10%, because then our oil would become more expensive than our competitors. However, with the freezing of tariffs imposed on European exports at 10% everyone is burdened and the market shares will not be affected. Of course, it can because everything becomes more expensive for a slight decline for everyone.
The main problem for exports of all countries to the US and of course for ours is the reduction of the purchasing power of Americans that will come from the dollar retreat, inflation to the US and possibly from the recession of the US economy, though if it is verified. The reduction in the purchasing power of Americans will also reduce their potential to consume imported European and Greek products.
However, the small value ($ 2 billion) of exports of Greek products to the US is not expected to create a major problem in the Greek economy.
Tourism
On the contrary, if the purchasing power of Americans is declining, we may find a decline in tourists from the US coming to Greece in a few months. If the incomes in Europe are receding at the same time due to a reduction in international trade and those in China (from the outrageously high duties imposed by Trump on Chinese exports to the US), then the blow to Greek tourism may be alarming.
THE tourismSo, as our most powerful “export” product, is the critical factor for the Greek economy.
Duties may be the reason, but the problem will come from the simultaneous reduction of income and purchasing power in all countries. We will probably not see the impact on tourism this year, since the 90 -day freezing of duties brings us to August, where the holidays are closed and prepaid.
However, gradually, from the summer onwards, if things are not calm internationally and if there are worrying developments on the geopolitical fronts, Greek tourism may be hit. This will affect not only balance with abroad, but income and liquidity in the domestic market and in a very large number of tourism dependent sectors and workers.
Investment
Another area that may be hit by Trump policies is the foreign investment in Greece. As things are not going well on international stock markets, big fund managers are closing in the regional markets to have liquidity in their basic markets. The Greek Stock Exchange is a regional market and is largely based on foreign investors.
The liquidation of their positions in Greek shares directly affects our stock market. But not only this problem is, but all the investments in Greece associated with foreign capital. From real estate and hotels to placements in Greek businesses. Greece needs foreign investment to grow and an international disruption, and even more so, an international recession, would cancel investment plans that already exist and have begun.
The bonds
Even worse things will be if the crisis in the bond market is expanded. US bonds have already shown a great sensitivity to Trump’s moves. Last Wednesday their prices retreated and their yields went up. Although the next day, after the announcement of the duty freezing, prices were to some extent restored, concern remains.
US bonds are considered worldwide “security shelters”. Their course depends on the situation and prospects of the American economy, the international reliability of the US, the dollar and its interest rates. Falling their prices leads to an increase in US borrowing costs and automatically adjusts up and borrowing costs of all other states.
If borrowing costs increase through bonds, Greece has a serious problem due to very high loan needs. Predicting what will happen in this market is very complicated right now, and the central banks, the US Fed and the European ECB, have difficult puzzles to solve to decide what to do with their fields.
The decisions
Trump is pushing the Fed quickly reduce American interest rates to avoid recession. The Fed has a double task of its statutes: to control inflation and to ensure full employment. Inflation has now fallen into the US, but is projected to go up due to duties soon. Therefore, the Fed has difficulty rushing to lower interest rates. At the same time, employment in the US is at the full -time zenith, unemployment is low and the Fed has no reason to reduce interest rates to increase growth rate.
The dollar’s retreat is also a deterrent factor in reducing interest rates and even more deterrent will be a decline in international demand for US bonds. On the other hand, if there is a recession in the US, the Fed should reduce interest rates. All of these factors, however, who have not yet evolved to show what needs to be done, create a very difficult puzzle. Whatever the Fed does, it makes something and spoils something else. He probably will not rush to make decisions unless the scene is clear.
OR ECB It is in easier position and has decided to reduce the euro interest rates – and soon and dynamically. However, it must take into account the developments in bond markets, especially now that its loan needs due to the increase in defense spending will be high. With inflation under control and the euro reinforced, the ECB can reduce interest rates. If, however, there is a recession and if European bonds lose their attractiveness, the interest rate should be attractive. Developments will show the way.
In conclusion, therefore, the impact of Trump policy on the Greek economy relate to the general impact on the European economy and bond markets.
In the coming months it will be clear whether Trump’s aggressive trade policy, even if it has limited it to China and its old -fashioned caused a serious crisis of confidence and credibility for the US, so the problem will be generalized and very big for everyone. The good scenario is for the markets to believe that Trump has “cooked” under the pressure of the markets and senators who convey the reactions of American citizens and that the situation will be smoothed, so the consequences of this imperial illusion of the US president will be limited.
Photos: Eurokinissi, Getty Images/Ideal Hellas