Greece Economy After Euro Crisis

2275 WordsSep 6, 201310 Pages
GREECE ECONOMY AFTER EURO CRISIS NAME: HARSHITA AGRAWAL CLASS: FYBA ‘C’ ROLL NO.: 325 Introduction Greece is a service sector led economy, which contributes 85%. Industry (12%) and agriculture (3%) are relatively very small. The main industries include tourism and merchant shipping which are more global in nature. Greece as an economy was doing very well until the global economy crashed in 2008 due to “Global Financial Crisis (GFC)”. During the period of 2001- 2007, Greece was one of the high growth economies in the European Union (EU) with nominal Gross Domestic Product (GDP) growing at an average rate of around 7% per annum and real GDP growing at a rate of 4.2% per annum which was more than the growth in EU. The GFC was a result of…show more content…
The details below substantiate this view: 1. GDP growth rates: Successive Greek governments have, among other things, customarily run large deficits to finance public sector jobs, pensions, and other social benefits. Allocating of capital in non- profit sectors (eg: military) didn’t benefit the government furthermore. The Global Financial Crisis had a particularly large negative impact on the GDP growth rates in Greece. Two of the country's largest industries are tourism and shipping, and both were badly affected by the downturn, with revenues falling to 15% in 2009. 2. Government deficit: Huge fiscal imbalances developed during the past six years from 2004 to 2009, where "the output increased in nominal terms by 40%, while central government primary expenditures increased by 87% against an increase of only 31% in tax revenues." 3. Government debt-level: The long period with high yearly budget deficits (starting in 1981), caused a situation where the debt-to-GDP ratio since 1993, was always found to be at an unhealthy territory above 94%. In the aftermath of the GFC the debt level worsened reaching to 120% of the GDP as the Government’s commitment towards social and other unproductive schemes continued. It kept worsening as the GDP growth rates collapsed in the aftermath of GFC and had reached to an unsustainable level triggering the likely default. 4. Statistical credibility: Problems

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