GREECE ECONOMY

Prepared By : - BHARAT NIRKHE

APURVA DUBEY

ANJALI SINGH

INTRODUCTION

• THE ECONOMY OF GREECE IS THE 43rd or 50th LARGEST IN THE WORLD AT $242 BILLION OR $283 BILLION BY NOMINAL GDP OR PURCHASING POWER PARITY RESPECTIVELY.

• ACCORDING TO WB STATISTICS FOR THE YEAR 2013, GREECE IS THE THIRTEENTH-LARGEST ECONOMY IN THE 28-MEMBER EUROPEAN UNION.

• A DEVELOPED COUNTRY, THE ECONOMY OF GREECE MAINLY REVOLVES AROUND THE SERVICE SECTOR (80.6%) AND INDUSTRY (16%)WHILE AGRICULTURE MADE UP AN ESTIMATED 3.4% OF THE NATIONAL ECONOMIC OUTPUT IN 2012.

• THE GREEK MERCHANT NAVY IS THE LARGEST IN THE WORLD.

INTRODUCTION

• GREECE IS CLASSIFIED AS AN ADVANCED, HIGH-INCOME ECONOMY, AND WAS A FOUNDING MEMBER OF THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD) AND THE ORGANIZATION OF THE BLACK SEA ECONOMIC CO-OPERATION (BSEC).

• THE COUNTRY'S ECONOMY WAS DEVASTATED BY THE SECOND WORLD WAR.

• THE HIGH LEVELS OF ECONOMIC GROWTH THAT FOLLOWED THROUGHOUT THE 1950s TO 1970s ARE DUBBED THE GREEK ECONOMIC MIRACLE.

• THE SUBSEQUENT GREAT RECESSION AND GREEK GOVERNMENT-DEBT CRISIS, A CENTRAL FOCUS OF THE WIDER EUROZONE CRISIS

STRENGTHS AND

WEAKNESSES

• GREECE ENJOYS A HIGH STANDARD OF LIVING AND VERY HIGH HUMAN DEVELOPMENT INDEX, RANKING 29TH IN THE WORLD IN 2012.

• THE SEVERE RECESSION OF RECENT YEARS HAS SEEN GDP PER CAPITA FALL FROM 94% OF THE EU AVERAGE IN 2009 TO 73% IN 2013.

• THIS LED CLAIMS THAT GREECE HAD NOT ACTUALLY MET ALL ACCESSION CRITERIA AND THE COMMON PERCEPTION THAT GREECE ENTERED EUROZONE THROUGH FALSIFIED DEFICIT NUMBERS.

• GREECE'S MAIN INDUSTRIES ARE –

• TOURISM,

• SHIPPING,

• INDUSTRIAL PRODUCTS,

• FOOD AND TOBACCO PROCESSING,

• TEXTILES, CHEMICALS,

• METAL PRODUCTS,

• MINING AND

• PETROLEUM.

STRENGTHS AND

WEAKNESSES

• A STUDY OF THE PERIOD 1999-2009 BY FORENSIC ACCOUNTANTS HAS FOUND THAT DATA SUBMITTED TO EUROSTAT BY GREECE AMONG OTHER COUNTRIES HAD STATISTICAL DISTRIBUTION INCATIVE OF MANIPULATION

STRENGTHS AND

WEAKNESSES

EUROZONE ENTRY

EUROZONE ENTRY

• ACCEPTANCE INTO THE ECONOMIC AND MONETARY UNION

• BASED ON FOLLOWING CRITERIA :-

• INFLATION RATE,

• PUBLIC DEBT,

• LONG-TERM INTEREST RATES,

• EXCHANGE RATE.

• CURRENCY SWAP

• THE GREEK ECONOMY ALSO FACES SIGNIFICANT PROBLEMS, INCLUDING

• RAPIDLY RISING UNEMPLOYMENT LEVELS,

• TAX EVASION,

• CORRUPTION

• LOW GLOBAL COMPETITIVENESS.

• CORRUPTION PERCEPTIONS INDEX.

• EU'S LOWEST INDEX OF ECONOMIC FREEDOM AND GLOBAL COMPETITIVENESS INDEX

• ACCUSED OF COVERING UP THE EXTENT OF ITS MASSIVE BUDGET DEFICIT

EUROZONE ENTRY

GREECE DEBT CRISIS

• BY THE END OF 2009, AS A RESULT OF A COMBINATION OF INTERNATIONAL AND LOCAL FACTORS THE GREEK ECONOMY FACED ITS MOST-SEVERE CRISIS SINCE THE RESTORATION OF DEMOCRACY IN 1974.

• INDUSTRIAL PRODUCTION IN THE COUNTRY

GREECE DEBT CRISIS

• SECTOR’S HARDEST HIT HAS BEEN THE GARMENT INDUSTRY

• UNEMPLOYMENT SKY ROCKETED

• YOUTH UNEMPLOYMENT PEAKED

GREECE DEBT CRISIS

BACKGROUND

• GREECE JOINED NATO

• RESPONSE TO GREEK SOVEREIGN DEBT CRISIS

• HUGE CRISIS IN SHIPPING AND TOURISM SERVICES.

• INTERNATIONAL CREDITORS EXPECTED IT TO EXPAND SLIGHTLY IN 2014.

• GREEK UNEMPLOYMENT IS AMONG THE HIGHEST IN EUROZONE.

BACKGROUND

RULE OF LAW

• NINETY PERCENT OF HOUSEHOLDS SURVEYED IN 2013 CONSIDERED GREECE’S POLITICAL PARTIES TO BE CORRUPT.

• NEVERTHELESS, THE JUDICIARY IS INDEPENDENT AND THE CONSTITUTION PROVIDES FOR PUBLIC TRIALS.

• PROTECTION OF PROPERTY RIGHTS IS NOT STRONGLY ENFORCED.

REGULATORY EFFICIENCY

• PACE OF REGULATORY REFORM LACKS

• LICENSING BARRIERS IN LAUNCHING A BUSINESS

• LABOUR MARKET REMAINS RIGID AND STAGNANT.

• MONETARY STABILITY IS WEAK

• GREECE IS RECEIVING SUBSTANTIAL SUBSIDIES FROM THE EU.

LATEST DEVELOPMENTS

• CONTINUING CONCERNS ABOUT GREECE OUTWEIGHED THE PROSPECTS OF THE EUROPEAN CENTRAL BANK STARTING ITS QUANTITATIVE EASING PROGRAM THIS MONTH, MAKING FOR AN UNCERTAIN START TO THE WEEK FOR STOCK MARKETS .

• IN GREECE, THE ATHENS MARKET FELL 2.45% TO 858.95. EXPORT ORDERS DETERIORATED WHILE THE EMPLOYMENT COMPONENT FELL NEARLY THREE POINTS TO THE LOWEST LEVEL SINCE JUNE 2013.

• THE ISM SAID ITS INDEX OF FACTORY ACTIVITY FELL TO 52.9 IN FEBRUARY FROM 53.5 THE MONTH BEFORE, THE LOWEST READING SINCE JANUARY 2014. ECONOMISTS HAD BEEN EXPECTING A READING OF 53.1.

POVERTY STRICKEN

• MANUFACTURING BRAVED THE COLD WEATHER IN FEBRUARY, REPORTING AN UPTURN IN THE PACE OF GROWTH.

• THERE WILL BE A THIRD GREEK RESCUE PACKAGE OF UP TO €50BN AND SPAIN WILL CONTRIBUTE UP TO 14%, ACCORDING TO COMMENTS REPORTEDLY MADE BY SPANISH ECONOMY MINISTER LUIS DE GUINDOS.

• MORE BAILOUTS COULD BE EXPECTED WITH OTHER HIGHLY INDEBTED PIIGS NATIONS WAITING IN THE WING

• UNEMPLOYMENT ACROSS THE EUROZONE FELL BY 1,40,000 PEOPLE IN JANUARY, PULLING THE REGION’S JOBLESS RATE DOWN TO 11.2%

LATEST DEVELOPMENTS

LAWMAKERS (JUST NOT GREECE’S) APPROVE

A BAILOUT EXTENSION

CONCLUSION

• GREECE’S CREDITORS HAVE BY AND LARGE INSISTED THAT PRIOR AGREEMENTS BE HONORED, AND TOLD THE GOVERNMENT THAT ITS RADICAL PLANS FOR STATE LARGESSE ARE OFF THE TABLE.

• A FEW VERBAL TWEAKS WHICH CONSIST OF THE EU, THE IMF AND THE ECB WHERE GIVEN AS A POLITICAL CONCESSION TO THE NEWLY ELECTED GOVERNMENT, WHICH HAD CREATED HIGH EXPECTATIONS WITH ITS ELECTORATE.

• THE TENTATIVE AGREEMENT WITH CREDITORS REACHED PREVIOUS WEEK IS MUCH FAVORABLE TO GREECE THAN WHAT WAS ON THE TABLE.GREECE APPEARS ALSO TO LOSE CONTROL OF THE ELEVEN EURO BILLION RESERVES OF THE GREEK BANKING STABILITY FUND.