Greece will struggle to cope with rising living costs

Significance

The announcement comes on the back of relatively tight fiscal policies and economic growth that outperforms EU peers. Yet the bullish macroeconomic picture has not translated into better living conditions for Greeks.

Impacts

• Weak household demand will undermine profits of small and medium-sized enterprises, which rely heavily on domestic consumers.
• Frustrations over the rising cost of living could drive the support for radical parties.
• Reduced levels of public spending on education and healthcare will likely deplete Greece’s human capital and dampen future economic growth.