Greece Economy After Euro Crisis

Before the crisis, in order to be a part of the Eurozone, countries had to have budget deficits less than 3% of their GDP, national debt less than 60% of their GDP, and inflation rates within 1.5-2% of the economy with the lowest inflation rate in the Eurozone. However, these were not strictly enforced, obviously, as Greece got away with it in extreme measures with no penalty. According to Michael W. Bauer and Stefan Becker, due to the crisis, “there have been crucial changes to all procedures that steer national economic and fiscal policies,” and, “it improves the stringency of EU economic policy-making, providing clear timelines and combining ‘hard’ and ‘soft’ measures” (219). In theory, this should significantly improve the system, as the crisis likely never would have happened if the Eurozone qualifications had been strictly enforced.

The Golden Age of Greece is well known for its sculptures, buildings, rulers, and philosophies. Today, modern Greece is known for having economic crisis's as well as political turmoils. Greece's problems began when they joined the European Union. Greek drachma was officially replaced by the euro when they joined. Greece approved the euro in 2001, not knowing what they were getting in to. When the Prime Minister Konstantinos Karamanlis came to power he realized that the budget deficit was not 1.5%, but 8.3%. That outstanding amount greatly hurt the economy. By 2008, Greece's tax collection crumpled and unemployment was at an all time high. Unfortunately, by 2014, 30% of Greek's population did not have a job (Greece Debt Crisis). In contrast, today's Greece is a complete different from the Golden Age. Greek unemployment soared as austerity took its toll.

Greece’s unemployment rate has hit another highest record in May 2013, which is 27.6%. Greece continues to suffer jobless labour market from the deep recession. Among all the labour force aged 16-24, the rate is 64.9% as the Greece sees the sixth year of recession. Jobs of any kind are scarce in today’s Greece. Deep recession have swept away a quarter of the Greece’s GDP. Greece, the country of 11 million people has lost more than a million jobs as business shut down or lay off staff.

The financial headlines of 2012 were prevalent with the tribulations of the Greek economy. Its problems, in the eyes of many of the other nations of the euro zone, were not only negatively impacting the prosperity of the Greeks, but also the viability of the European Union. The country as a whole requires a major restructuring. Not only are drastic changes needed in financial and economic policies, but the Greeks need to understand their attitude of government entitlements cannot be sustained. The mismanagement of the Greek economy is also evident in its place in the global market community. It has not found the path that a county needs to follow to become an active member of the vibrant,

As Europe slipped into recession in 2009, a problem that started in the banks began to affect governments more and more, as markets worried that some countries could not afford to rescue banks in trouble. Investors began to look more closely at the finances of governments. Greece came under particular scrutiny because its economy was in and successive governments had racked up debts nearly twice the size of the economy. The threat of bank failures meant that the health of government finances became more important than ever. Governments that had grown accustomed to borrowing large amounts each year to finance their budgets and that had accumulated massive debts in the process suddenly found markets less willing to keep lending to them. Hence, what had once begun as a banking crisis became a sovereign debt crisis.

The economic crisis within the Eurozone has grown rapidly for the past five years, and members of the European Union struggle to enact any effective measures to halt or reverse its effects. Perceived booms in the housing markets were really only bubbles which popped and sent entire national economies spiraling downward into recession. Nations of the Eurozone have accumulated massive public debts, far larger than the 60% of GDP maximum specified in the Stability and Growth Pact. In 2011, Greece’s debt reached an unbelievable 170.3% of its GDP. Economic punishments are the specified consequences for violating this regulation, but the pact has not been adequately or consistently enforced. So many states have fallen past the debt limit that

According to Cia.com, Greece has a capitalist economy with a public sector, representing about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 18% of GDP. However, immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP.

Figure 2 displays the substantial financial struggle Greece faced compared to their fellow European counterparts between 1994 and 2014. In more recent years, the Greek government debt was 177% of its GDP. (Kirk, 2017)

Before the creation of the European currency countries like Greek, Spain and Portugal had to pay high interests on the amount of money they borrowed form banks. At the same time, international Banks were not comfortable enough to lend them too much money. For this reason, economically weak countries like Greek, Spain and Portugal had to balance their budget and spending. After Greek and other European counters joined the EU, they were given vast access to capital in a form of loans, and the amount of money they borrowed increased rapidly. Smaller counters suddenly had lager access for credit like never before so they borrowed money and built houses, roads, and health sectors. Even If the EU member states were unable to repay their loans economically strong countries like Briton, and germen would stepped in and cover some of the loses because they were now bound by a common currency. With a few years, the governments of Greek, Portugal, and Spain accumulated huger debt. However, they were able to repay this debt with more borrowed money. Credit flowed debt accumulated and the economies of Europe became tightly intertwined. Finally, the 2008 financial crisis brought borrowing to a

Although a commonly accepted view is that the hidden budget deficit in Greece is the beginning of the European sovereign debt crisis, the real causes of this economic crisis can be various. To reveal the whole event, a comprehensive review of the background is

One in five jobs created in Greece is related to the tourism sector. Tourism is essential to Greece's effort for recovery from their economic crises. Every 30 or more tourists visiting Greece, creates one new job for a Greek. In 2016, Greece had 4.785 million of labor force, according to the CIA. The agricultural sector had only 12.6%, while the industry sector had 15% and the services sector had 72.4% of the country ‘s labor force.

The creation of the single European currency has exacerbated the nature and extent of the Eurozone sovereign debt crisis.

When the European Union was established in 1993, its goal was to create a common currency in Europe, called the euro (“Eurozone”). This goal was achieved in 1999, and the euro is now used by 17 European Union countries, including Greece (“EUR”). Greece adopted the euro in 2001, and their economy has been struggling ever since. Since joining the European Union, Greece has struggled economically, politically, and might continue to struggle in the future.

There were still some countries in Europe that had their own debt but it seemed that Greece was at its worst. The budget had been in deficit for many consecutive years.

What is the European Debt Crisis? The European Debt Crisis is the failure of the Euro, a currency that ties seventeen European countries together. In this paper, I will be describing the cause and effect of the debt crisis along with what would happen if the European Union stayed with the economy they have. Then what I believe is the best solution to fixing the debt crisis.