Greek exports experienced a year-on-year decline of about 9% (in real terms) during the period from November 2023 to January 2024, amidst a «perfect storm» of impacts: (i) climate change, (ii) geopolitical unrest, and (iii) anemic international demand. Specifically, almost half of this decline is attributed to losses in olive oil and cotton exports, where climate change affected cotton production (-47%) and intensified the «lows» of the olive oil production cycle (24% lower than an average "poor harvest").
However, even excluding these two products, Greek exports remained in negative territory in the last quarter (-5%, in real terms), reflecting:
- Geopolitical tensions in neighbouring countries: The reduced freight going through the Suez Canal has hindered i) access to certain markets, ii) the delivery of crucial raw materials for exporting companies, and iii) Greece's role as a transit hub, with rerouting through the Cape of Good Hope.
- Weak demand conditions in the Western EU and Balkans: These markets, absorbing c.2/3 of Greek exports, posted an annual drop of 8% in 2023:Q4, vs. +1% in other destinations.
In this environment, Greek exports remained in negative territory for two consecutive quarters (August 2023 – January 2024), with cumulative losses of around 9% of the gains achieved during the dynamic period of 2020-2023:H1, where Greek products increased their share in European exports by ¼ (to 0.52% from 0.43% in 2019). However, delving into the data reveals that despite the decline, Greek products continue to demonstrate resilience, as:
- The losses of the last semester were smaller than the average semester’s increase during the dynamic period (€0.6 billion compared to €1.0 billion).
- The Greek products (excluding the structurally weak clothing sector) maintained their increased market share, achieved during the aforementioned dynamic period, intact.
At the sectoral level, the picture is not uniform, as three distinct categories emerge:
- The food and wood sectors (covering a cumulative 30% of exports) are characterized as resilient, since they are the only ones registering positive growth in the last quarter (+4% and +13% respectively), continuing the upward trend of the period 2020-2023H1 (+23% and +94% respectively).
- The clothing sector (covering 3% of exports) is characterized as weak facing continuous pressure throughout the reference period (2020-2023), while simultaneously experiencing the most significant decline in the last quarter (-38%). Under these conditions, the sector has lost one-third of its export volume compared to 2019 (-€0.5 billion).
- The remaining sectors (i.e., the remaining 2/3 of exports) faced comparatively less pressure in the last quarter (ranging from -1% to -8%), and thus, despite the cumulative pressure of the last semester, they managed to retain a large portion of the gains from the previous period. An adverse exception is textiles, that during the last quarter lost 60% of the dynamic period’s gains.
According to our estimates for 2024, exports will gradually accelerate as the year progresses. Despite the challenging beginning, Greek exports are expected to approach their medium-term trend (+5%) by the end of the year, thus, achieving an annual performance of around 3%. This estimate is consistent with the improvement in global trade volume forecast (+2.6% in 2024) as well as the EU economic outlook (+0.9% in 2024 compared to +0.5% in 2023, in terms of GDP), combined with the gradual weakening of the negative impacts of last year's low production of olive oil and cotton. In line with this estimate is the rebound of Greek exports into positive territory in February (+4%, excluding olive oil and cotton), as well as the upward trend in export orders for March. However, 2024 remains a year of challenges, with businesses continuing to face difficulties due to geopolitical turmoil in «our neighborhood» and weak economic conditions in our key markets. Additionally, climate change remains a constant threat, and as demonstrated in 2023, it can play a crucial role in the evolution of exports.
See the infographic:
