The Alphaville column of the Financial Times attempts to present the recovery of the Greek economy in a broader historical context, concluding that Greece is one of the countries in the Eurozone with the best performance, but it is also the poorest.
As the analysis points out, this is the result of a remarkable economic crisis, which has created a “hole” from which it will take a generation before Greece can climb out.
The Financial Times recalls that S&P last week upgraded the country’s outlook to positive, praising the Greek authorities for broad reforms that boost growth and reduce debt.
Eurostat figures show that Greek debt actually fell by 10.8 percentage points in 2023, to 162% of GDP.
The Greek economy showed growth rates of 2% in 2023, while, for example, the German economy shrank by 0.3%. As of 2019, Greece is showing almost double the rate compared to the Eurozone, while according to the IMF it is expected to continue to outperform for the next two years.
Strong tourism performance, along with an improving labor market and recovery in consumption are helping. While according to the FT, reforms aimed at boosting growth are also helping.
But economic recovery has raised Greece’s standard of living only slightly above the EU average over the past two years, leaving the country currently the poorest in the Eurozone.
As the FT notes, things weren’t always this way, as Greece’s GDP per capita was similar to the EU average until 2009. Since then, 10 countries have seen their living standards rise above Greece’s. Consequently, the country is currently the second poorest in the EU after Bulgaria and the poorest in the Eurozone.
The reason is none other than austerity during the years of the debt crisis. The economy shrank by almost 30%, consumer spending fell by 24%, government spending by 20% and investment by 65%.
Manufacturing activity almost halved, retail trade and business activity shrank by almost a third. Unemployment soared to an all-time high of nearly 30%.
Today, the Greek economy is about 19% smaller than it was in 2007, while the EU economy is 17% larger.
The financial blow is almost unprecedented in modern times and can only be compared to the Great Depression of the US in the 1930s, the FT notes, citing George Lagaria, chief economist at Mazars Wealth Management.
Real wages fell steadily until 2022 and are 30% below pre-crisis levels. Which means that the average salary in Greece is one of the lowest among developed economies.
And at the same time, the FT points out that the Greek economy may be more balanced today, following the decline in construction activity, but it faces long-term challenges, such as low investment and limited competitiveness, the effects of climate change and unfavorable demographics. with the severe decline in births.
moneyreview.gr
Read also:
Reuters: Full reset this year for Greece – The next challenges
Eurobank: Positive indications for the growth of the first quarter
IOBE: Revises the 2024 growth forecast to 2.1% – The risks
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Tags: Greece leading player development poorest country Eurozone
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