The decision by trade insurers this week to stop covering exporters shipping to Greece could have "alarming" consequences, exacerbating shortages and pushing up prices for consumers, the country's retail federation said on Friday.
"Insurance companies contribute significantly to the creation of a climate of security and trust in the market," the ESEE retail lobby said.
"This development has extremely alarming – if not catastrophic – consequences for trade and domestic industry," it said, adding that imports of raw materials and machinery would be worst affected.
ESEE's warning came as the world's second-biggest trade credit insurer, Atradius, said it too had stopped covering new Greek export shipments due to fears debt-laden Greece could be forced out of the euro.
"While we will not cover supplies to new buyers in Greece, we continue to cover the trade credit risk with regard to selected existing buyers of our customers," Atradius said in an e-mailed statement late on Thursday.
Euler Hermes, the No.1 trade credit insurer, halted cover for new Greek exports on Wednesday, while third-ranked Coface did so last November.
Trade credit insurers cover exporters against the risk of not getting paid, and its withdrawal from Greece could make it harder for manufacturers there to source imported raw materials, insurance brokers have said.
"If our estimates are confirmed there will be further price increases on industrial products, fuel, food and drugs," ESEE said.
"Shortages on shelves are already evident, as is the risk of the domestic market collapsing."
The move by Euler Hermes and its rivals reflects mounting fears that Greece could vote parties opposed to spending cuts agreed as part of a European bailout deal into power in its June 17 general election, hastening a euro exit.
That would force companies there to revert to the drachma, which would likely fall sharply against the single currency to reflect Greece's fiscal crisis, making it harder for Greek importers to pay euro-denominated invoices.
Greek importers and exporters alike are finding it difficult to do business with foreigners, the ESEE federation added, predicting that about 200,000 small-sized companies will be affected the most.
Greece imported 45.6 billion euros worth of goods last year, more than double the 20.2 billion it exported, according to International Monetary Fund figures.
Insurance brokers say trade credit insurers have been gradually tightening terms for Greek export business for months in response to increasingly lengthy payment delays.
Companies within or financially dependent on Greece's cash-strapped state sector are seen as particularly high-risk, and some have offered to pay overseas suppliers in government bonds rather than cash, according to one broker source.
