FT: Greece is a leading player in development but is the poorest country in the Eurozone

To present her recovery Greek economy in a wider historical context attempts the column Alphaville of Financial Timesconcluding that Greece is one of its countries 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 created a “hole” and it will take a generation before Greece can get out of it.

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.

However, the recovery of the economy has raised Greece’s standard of living only slightly compared to the EU average. in the last two years, with the result that the country is currently the poorest in the Eurozone.

As the FT notes, this was not always the case, as Greece’s GDP per capita was similar to the EU average. until 2009. Since then, 10 countries have seen their standard of living rise above that of Greece. 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, when the EU economy is 17% higher.

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.

Source: moneyreview.gr