Greece is a champion in development and… poverty

The phrase “the operation was successful but the patient died” is reminiscent of the financial situation in Greece, at least according to the data that is coming to the surface. In particular, our country appears to be the poorest within the Eurozone, while the Greek economy achieves remarkable performances and international houses restore their confidence in it.

The fact that a few days ago the S&P rating agency upgraded it is indicative outlook of Greece to positive, while at the beginning of March DBRS confirmed the credit rating of Greece with BBB (low) maintaining a stable outlook.

It is recalled that the Canadian house has given Greece an investment grade since last September, following the German credit rating house Scope, while S&P and Fitch did the same, in October and December 2023, respectively.

At the same time, the HFSF is proceeding with disinvestment from Greek banks, which are fully returning to the private sector, in moves that testify that the Greek economy has managed to leave behind the long-term economic crisis and has begun the reconstruction of a new reality with more auspicious prospects.

Economic growth, but…

With the Greek paradox, i.e. when the numbers are prosperous the people are struggling, they also dealt with Financial Times who gave their own perspective on the issue, analyzing the “strong economic growth” that occurred after the pandemic. In this particular analysis, the fact that our country is among the best performers in the Eurozone is also the poorest.

Regarding Greece’s successes, they are attributed to government initiatives that have resulted in the implementation of an extensive program of far-reaching reforms and addressing long-standing bottlenecks.

After all, the figures officially presented by Eurostat and they confirmed that our country is “running” with growth rates higher than the average of the euro zone which allowed it to reduce the debt to GDP ratio. In particular, the Greek public debt in relation to GDP decreased by 10.8 percentage points to 162% in 2023, while the Greek economy grew by 2% in 2023. It is typical that a powerful economy – until recently – such as the German , ended last year with a recession of 0.3%.

It is worth noting that this is not a one-time success, as since 2019, i.e. before the pandemic, our country has managed to grow at twice the rate of the Eurozone. Finally, the positive course on which the Greek economy is moving was also confirmed by the International Monetary Fund, which predicted for 2024 growth of 2%, while noting that our country for the next two years will grow above the rates of the Eurozone.

The factors that contributed to the success

This success did not happen overnight. Instead, it took a long-term and multifaceted effort that changed the facts. An important role in this was played by the extension of the tourist season, as well as the strengthening of tourist traffic. The great attraction of tourists achieved by Greece, for an increasingly long period of time, essentially helps to increase consumption and also to create jobs. It is indicative that for the first time after many years unemployment in Greece is in single digits.

Government initiatives have also helped, enabling the implementation of structural reforms aimed at addressing traditional barriers to growth, including increasing digital access to public services, speeding up judicial decisions and improving transparency and of public finances.

The economist of BNP Paribas, Guillaume Derrien, also made this admission, who stated that: “Renewed political stability and strong fiscal consolidation make Greece a much more attractive country for investment than in the past.”

The Greeks are the poorest in the Eurozone

However, the rise observed in the standard of living of the Greeks in the last two years was not enough for our country to break away from the last place in the Eurozone. The economic crisis that “hit” the Greek economy and society was a catalyst in this development. By 2009, GDP per capita was at levels similar to the EU average.

Subsequently, ten countries “stepped on the gas” with the result that Greece is the poorest among the countries that have adopted the euro, and the second poorest in the European Union, as we surpass only Bulgaria. A Bulgaria that manages to rapidly reduce the gap that separates us and “threatens” to leave us in last place.

How to explain the Greek paradox

It may seem that the progress of the Greek economy cannot be connected with the high poverty observed, but there is an explanation and it goes by the name of “economic crisis and austerity”.

An explosive mix of spending cuts and tax increases may have been necessary for Greece to receive valuable foreign aid, but they put unbearable pressure on businesses and households, which suffered losses unmatched in peacetime.

In particular, the Greek economy experienced a gigantic recession that reached 30%, while in 2016, not only did consumer spending drop by 24% and government spending by 20%, but also investment virtually disappeared, as it dropped by 65%. Also, 50% of the manufacturing activity, and 1/3 of the retail trade and the professional activity were destroyed. The “shock” experienced by the economy is reflected by the fact that unemployment reached an unprecedented level of 30%.

It is indicative that even today the economy of our country lags behind by 19% from that of 2007, at the same time that the European economy has grown by 17%.

A lost generation

Another important factor in the current situation is wages,

which have shrunk by 30% compared to pre-crisis levels, while the construction sector which offered significant help before the crisis has also been hit hard.

At the same time, significant concerns are emerging for the country’s long-term economic prospects, due to, among others, the long period of reforms required to return to the pre-crisis point, climate change that threatens important sectors for the Greek economy, such as tourism , but also the low birth rate. These figures do not negate the success of our country’s economic progress, but it must be placed within a framework of awareness that perhaps an entire generation of Greeks was “sacrificed” on the altar of the economic crisis.