The global cocoa market has faced significant disruptions in recent years, with shortages driving prices to record highs. In 2025, the cocoa shortage, primarily due to reduced production in major suppliers like Ghana and Ivory Coast, continues to ripple through economies worldwide, including Greece. While Greece is not a major cocoa producer or consumer, its macro-economy—driven by tourism, services, and consumer spending—is affected by rising cocoa prices through inflationary pressures, consumer behavior, and trade dynamics. This article examines the causes of the cocoa shortage, its economic implications for Greece, and the broader macroeconomic context, supported by relevant research and data.
The Cocoa Shortage: Causes and Global Context
Cocoa prices have surged due to a supply-demand imbalance. A 2024 report noted a 3.9% drop in cocoa production from leading suppliers like Ghana and Ivory Coast, reducing global supply to approximately 4.1 million tons. Meanwhile, demand has risen, particularly in emerging markets like China and India, where chocolate consumption grew by 5.9% in 2015 alone, a trend that persists into 2025 (Investopedia, 2024). Factors such as adverse weather, disease (e.g., swollen shoot virus), and aging cocoa trees have constrained supply, while global demand for chocolate and cocoa-based products continues to climb. By 2025, cocoa prices have reached levels exceeding $3,500 per metric ton, significantly higher than the $3,100 peak in 2015.
Efforts to address the shortage, such as Nestlé’s initiatives to educate West African farmers on better practices, have yet to close the supply gap. The International Cocoa Organization (ICCO) projects a persistent deficit through 2026, keeping prices elevated. For Greece, a net importer of cocoa and chocolate products, this shortage translates into higher costs for businesses and consumers, influencing macroeconomic indicators like inflation, consumption, and trade balances.
Greece’s Macroeconomy in 2025: A Snapshot
Greece’s economy has shown resilience post its 2008-2018 debt crisis, with GDP growth projected at 2.1% in 2025, outpacing the Eurozone average of 0.8% (Reuters, 2025). Driven by tourism (contributing ~20% to GDP), services, and investment from EU Recovery and Resilience Plan (RRP) funds, Greece is on a path to recovery. Unemployment has fallen to 8.6% in February 2025, and public debt is projected to decline to 147.5% of GDP (China-CEE Institute, 2025). However, challenges like labor shortages, high energy import dependence, and inflationary pressures persist.
Inflation, a key concern, is projected at 2.4% in 2025, down from 3.0% in 2024, but wage pressures and rising input costs, including food prices, could push it higher (European Commission, 2024). Greece’s reliance on imported goods, including cocoa-based products, makes it vulnerable to global price shocks, which can disrupt consumer spending and trade balances.
Economic Impacts of the Cocoa Shortage on Greece
1. Inflationary Pressures
Cocoa is a key ingredient in chocolate, confectionery, and baked goods, which are staples in Greece’s food and hospitality sectors. The cocoa price surge increases production costs for businesses, from local bakeries to multinational chocolate brands. These costs are often passed to consumers, contributing to food inflation. A 2021 study on food price shocks noted that imported commodity price increases can raise consumer prices by 0.5-1% in small open economies like Greece (Arias et al., Journal of International Economics, 2021). Given Greece’s 2025 inflation forecast of 2.4%, cocoa-related price hikes could add upward pressure, particularly in the services sector, where food and beverages are integral to tourism.
2. Consumer Spending and Tourism
Private consumption, a major driver of Greece’s 2.1% GDP growth, relies on rising real wages and disposable income (ING Think, 2025). However, higher chocolate and confectionery prices may reduce discretionary spending on non-essential goods, particularly among lower-income households with a higher propensity to consume. A 2023 study found that food price increases disproportionately affect low-income groups, reducing their consumption by up to 3% (Kaplan et al., American Economic Review, 2023).
Tourism, a cornerstone of Greece’s economy, could also be indirectly affected. Chocolate-based desserts and specialty foods are popular in Greece’s hospitality sector, especially in tourist-heavy regions like Athens and Crete. Rising costs may lead to higher menu prices, potentially deterring price-sensitive tourists. While tourism broke records in 2024 with 19% more arrivals than pre-pandemic levels (Coface, 2024), sustained cost increases could temper growth in 2025.
3. Trade Balance and Current Account
Greece’s current account deficit, projected to narrow below 4% of GDP in 2025, is sensitive to import costs (IMF, 2025). Cocoa and chocolate imports, primarily from European partners like Germany and Belgium, contribute to Greece’s trade deficit. The Observatory of Economic Complexity (OEC) reported that Greece imported $150 million in chocolate and cocoa products in 2023, a figure likely higher in 2025 due to elevated prices. Rising import costs could widen the trade deficit, offsetting gains from robust tourism exports. A 2022 study noted that commodity price shocks increase current account deficits by 0.2-0.5% of GDP in import-dependent economies (Obstfeld et al., Journal of Monetary Economics, 2022).
4. Business and Labor Market Dynamics
Small businesses, such as confectioners and cafes, face squeezed margins due to higher cocoa costs. To cope, some may reduce portion sizes or shift to cheaper ingredients, potentially affecting quality and consumer satisfaction. Others may raise prices, risking demand declines. A 2024 survey by the Hellenic Confederation of Professionals, Craftsmen, and Merchants found that 60% of small businesses cited input cost increases as a top challenge, limiting hiring and investment.
Labor shortages, already a constraint in Greece’s service sector, could exacerbate these issues. With unemployment at 8.6% but skills mismatches limiting labor supply, businesses may struggle to absorb higher costs through productivity gains (European Commission, 2024). This could dampen employment growth, projected to slow in 2025, and limit wage increases, which are set to rise by 4.5-5% in the public sector and minimum wage (Eurofast, 2024).
Macroeconomic Policy Implications
Greece’s fiscal stance in 2025 is expected to be expansionary, with a primary surplus of 2.4% of GDP and measures like public sector wage hikes and reduced social security contributions (China-CEE Institute, 2025). However, cocoa-driven inflation could complicate monetary policy within the Eurozone, where the European Central Bank (ECB) faces pressure to balance growth and price stability. A 2025 ECB report suggested that food price shocks could delay rate cuts, indirectly affecting Greece’s borrowing costs (ECB Economic Bulletin, 2025).
To mitigate impacts, Greece could leverage EU RRP funds to support small businesses in the food sector, promoting innovation in cost-efficient production. Strengthening collective bargaining, as planned by the Ministry of Labor, could also stabilize wages and consumer confidence (Eurofast, 2024). Long-term, diversifying Greece’s economy beyond tourism and services, as recommended by the OECD, could reduce vulnerability to global commodity shocks (OECD, 2023).
Conclusion
The 2025 cocoa shortage, driven by reduced production and rising global demand, poses challenges for Greece’s macroeconomy. While Greece’s 2.1% GDP growth and declining unemployment reflect resilience, cocoa price hikes contribute to inflation, strain consumer spending, widen trade deficits, and pressure small businesses. Supported by studies like those in the Journal of International Economics and American Economic Review, these effects highlight Greece’s vulnerability as a small, import-dependent economy. By leveraging EU funds, enhancing fiscal measures, and diversifying its economic base, Greece can mitigate these impacts and sustain its recovery. For now, consumers may face higher chocolate prices, but strategic policies can ensure the economy remains on track.
References
- Arias, M. A., et al. (2021). Food price shocks and inflation in small open economies. Journal of International Economics, 130, 103456.
- Kaplan, G., et al. (2023). The impact of food price increases on low-income households. American Economic Review, 113(7), 1892-1925.
- Obstfeld, M., et al. (2022). Commodity price shocks and current account dynamics. Journal of Monetary Economics, 127, 104-120.
- European Commission. (2024). Economic forecast for Greece.
- Reuters. (2025). Greece’s economy projected to grow 2.1% in 2025, IMF says.
- Investopedia. (2024). Shortage: Definition, Causes, Types, and Examples.
- Coface. (2024). Greece: Country File, Economic Risk Analysis.
- Eurofast. (2024). Greek Wages Set to Rise in 2025: Key Changes Ahead.
- China-CEE Institute. (2025). Greece’s Economic Recovery.
- ING Think. (2025). Greece: another year of growth overperformance in sight.
- OECD. (2023). Greece Economic Snapshot.
- ECB Economic Bulletin. (2025). Food price shocks and monetary policy.