By Nektaria Stamouli
ATHENS--Greek retailers and small businesses are starting to see
select items disappear from store shelves as a widening credit
squeeze weighs on importers, but industry officials expect that the
real crunch will become more evident by September if uncertainty
remains regarding the country's future in the euro zone.
Last week two of the world's biggest providers of trade credit,
Germany's Allianz SE (ALV.XE) unit Euler Hermes (ELE.FR) and
France's Coface, said they won't offer new insurance cover for
exporters shipping goods to Greece as they find it increasingly
difficult to price such cover amid worries that the country may
quit the euro zone.
Credit export insurance ensures that exporters are paid if their
client defaults. The loss of such cover is likely to have a major
impact on the willingness of companies to trade with Greece,
particularly given the country's deteriorating economy.
"We are close to what happened at the time of the break up in
the former Soviet Union back in the 1990s," said Dimitris
Asimakopoulos, chairman of the Hellenic Confederation of
Professionals, Craftsmen and Merchants.
Back then, Greece and other emerging economies in eastern Europe
also saw such credit insurance contracts freeze amid the broader
uncertainty gripping the region and which forced local importers to
put up the full cash amount of their imports before receiving the
merchandise. "By September we will have reached exactly that
point," he said.
Mr. Asimakopoulos said most businesses should be able to survive
on their inventories and their existing cash reserves before that
point. But he warned that Greek importers had already experienced
problems receiving credit insurance since the beginning of 2012 and
what happened last week was "the icing on the cake."
"The most important thing is that such actions create a climate
of fear and panic and this is the most dangerous for the country's
economy," he added.
He said there is already shortage in some specialty goods or
labels--such as some brand name personal care products, for
example--and that some companies that stock such products are
already teetering.
"Some importing companies could collapse in the near future and
this could lead to [shortages] problem until we have a successor
importer," Mr. Asimakopoulos said.
At the same time, importers of raw materials, are also feeling
the pain.
"This is blocking Greek merchants, it is a punishment of the
country, because of the [ghost] of the drachma," said Vasilis
Korkidis president of Greek retailers association, referring to the
country's former currency.
"There is already shortages in raw materials, mainly in metals,
which are not very obvious since the production is currently at low
levels. But, if uncertainty remains there will be collapse of the
domestic internal market by September," he said.
According to Mr. Korkidis, about 80% of products in the Greek
market are imported. Since importers have to completely pay in
cash, they will have to find EUR20 billion by the end of the year
to cover those imports, something he describes as "impossible".
At the same time, many Greek companies--both importers and
exporters alike--are facing a cash crunch as local banks have
slashed lending in a bid to preserve their own liquidity.
For several months now, Greek exporters have also had to
scramble to secure export credit guarantees from foreign banks
after importers abroad stopped accepting those guarantees from
Greek banks.
"Many companies are considering relocating their companies to
neighboring Balkan countries in order to have cash flow from banks
there," Mr. Asimakopoulos said.
-Write to Nektaria Stamouli at
nektaria.stamouli@dowjones.com