Greek Retailers Slump Killing Economy

salesWith austerity-crunched Greeks keeping their wallets in their pockets, retail stores are taking a big hit, with sales dropping like a stone in 2012, for a fourth consecutive year. The businesses reported an overall 10 percent slide and expect it to get worse this year.

Adjusted for inflation, sales dropped 12 percent, Greek statistics agency ELSTAT said, but overall consumers are buying 33 percent less than they were in 2009, a year after the country’s recession began with pay cuts, tax hikes and slashed pensions imposed by the government on the order of international lenders.

The rapid drop in consumption has been a major factor in the country’s deep recession, now in its sixth year, that has seen the Gross Domestic Product (GDP) fall by 24 percent since austerity began. During that time, more than 68,000 businesses have closed.

Household spending accounts for about three quarters of the economy in Greece the biggest share in any of the 17 Eurozone countries that use the euro, but with unemployment at a record 27 percent, pay cuts and tax hikes combined are eating up nearly half of disposable income, which has fallen 33 percent since 2010.

Ironically, while austerity was supposed to help the economy, it has hurt it, with tax revenues far off expectations despite big tax hikes because Greeks have slowed spending so much. Consumption taxes fell 23 percent in January and are expected to show a 6.3 percent drop for the year, making it harder for the government to meet fiscal targets, which could trigger more austerity, which could further drive down tax revenues in what some analysts have called a “death spiral.”

Even with sales up to 80 percent, many Greeks are just walking by and not even window shopping anymore. “The data is painting a rather grim picture about the state of the domestic consumer,” EFG Eurobank economist Platon Monokroussos told Reuters. Economists expect falling consumption to remain a drag on the economy this year, despite a slight improvement in consumer confidence after Athens secured more bailout funds in December, at the price of more austerity.

But falling prices may ease some of the pain. Greece and its foreign lenders expect consumer prices to fall by 0.8 percent in 2013, the first year of deflation in decades as some retailers, notably supermarkets, kept prices for a long time before finally relenting. The country’s dairy companies, which critics said operate like a cartel, have not cut back on prices in most cases. Producer prices stopped rising in January for the first time in more than three years, ELSTAT said.


  1. Thanks to the EU, I have now resorted to wear my Yia Yia’s clothes. My 60€ sandals have a hole in the sole as much as I have no soul but I have no money to buy another pair.

    Is any Greek driving North & heading towards Thessaloniki? I needs to hitch a ride to FYROM & buy me some sandals & a loaf of bread.

  2. Vicious circle…..

    Falling demand closes stores. Closing stores creates more unemployment. And the cycle continues. 

    Greece has now a 7 to 10 billion Euro shortfall (use top be 30B Euro) on it’s taxes versus expeditures. That has been there for EVER. It use to be covered up with a devaluing drachma, then stupid borrowing. Now it’s going to be taken friom the people assets and redistributed. 

    Anyone who lives in Greece will see their houses taxed until they use up their savings. Or their savings taxed under the phoney excuse that it was accumulated by tax cheating. This is not a ” “guess”, this is a FACT that is covered up by the government and media screaming “rich people tax fraud” while they rape the middle and lower classes. Under the pretense that they are going after the rich, they screw the middle and lower classes. 

    Unfortunately, you can’t blame them simply because there is not enough wealth to do otherwise. Blame the early pensions and civil servents for that shortfall. They are the largest creator of those shortfalls. 


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