Greek unemployment stood at 21.7% in April 2017. The youth unemployment rate (42.3% in March 2018) is extremely high compared to EU standards.
With an economy larger than all the other Balkan economies combined, Greece is the largest economy in the Balkans, and an important regional investor. Greece is the number-two foreign investor of capital in Albania, the number-three foreign investor in Bulgaria, at the top-three of foreign investors in Romania and Serbia and the most important trading partner and largest foreign investor of North Macedonia. Greek banks open a new branch somewhere in the Balkans on an almost weekly basis. The Greek telecommunications company OTE has become a strong investor in Yugoslavia and other Balkan countries.
Greece was a founding member of the Organisation for Economic Co-operation and Development (OECD) and the Organization of the Black Sea Economic Cooperation (BSEC). In 1979 the accession of the country in the European Communities and the single market was signed, and the process was completed in 1982. Greece was accepted into the Economic and Monetary Union of the European Union on 19 June 2000, and in January 2001 adopted the Euro as its currency, replacing the Greek drachma at an exchange rate of 340.75 drachma to the Euro. Greece is also a member of the International Monetary Fund and the World Trade Organization, and is ranked 24th on the KOF Globalization Index for 2013.
Debt crisis (2010–2018)
Main article: Greek government-debt crisis
Greece’s debt percentage since 1977, compared to the average of the Eurozone
The Greek economy had fared well for much of the 20th century, with high growth rates and low public debt). For over 20 years, until 2007, it featured high rates of growth, which, however, were coupled with high structural deficits, thus maintaining a (roughly unchanged throughout this period) public debt to GDP ratio of just over 100% . The Greek crisis was triggered by the turmoil of the 2007-2009 Great Recession, which lead the budget deficits of several Western nations to reach or exceed 10% of GDP . What was exceptional for Greece, was that the high budget deficit (which, after several corrections and revisions, was revealed that it had been allowed to reach 10.2% and 15.1% of GDP in 2008 and 2009, respectively) was simultaneously coupled with a high public debt to GDP ratio (relatively stable, at just over 100% until 2007 – as calculated after all corrections). Thus, the country appeared to lose control of its public debt to GDP ratio, which already reached 127% of GDP in 2009 . In addition, being a member of the Eurozone, the country had essentially no autonomous monetary policy flexibility. Finally, there was an effect of controversies about Greek statistics (due the aforementioned drastic budget deficit revisions which lead to an increase in the calculated value of the Greek public debt by about 10%, i.e., a public debt to GDP of about 100% until 2007), while there have been arguments about a possible effect of media reports. Consequently, Greece was “punished” by the markets which increased borrowing rates, making impossible for the country to finance its debt since early 2010.
The above revisions were largely connected with the fact that in the years before the crisis Goldman Sachs, JPMorgan Chase, and numerous other banks had developed financial products which enabled the governments of Greece, Italy, and many other European countries to hide their borrowing. Dozens of similar agreements were concluded across Europe whereby banks supplied cash in advance in exchange for future payments by the governments involved; in turn, the liabilities of the involved countries were “kept off the books”. These conditions had enabled Greece as well as other European governments to spend beyond their means, while meeting the deficit targets set out in the Maastricht Treaty.
In May 2010, the Greece’s deficit was again revised and estimated to be 13.6% which was the second highest in the world relative to GDP, with Iceland in first place at 15.7% and the United Kingdom in third with 12.6%. Public debt was forecast, according to some estimates, to hit 120% of GDP in the same year, causing a crisis of confidence in Greece’s ability pay back loans.avert a sovereign default, Greece, the other Eurozone members, and the International Monetary Fund agreed on a rescue package which involved giving Greece an immediate €45 billion in loans, with additional funds to follow, totaling €110 billion. To secure the funding, Greece was required to adopt harsh austerity measures to bring its deficit under control. A second bail-out amounting to €130 billion ($173 billion) was agreed in 2012, subject to strict conditions, including financial reforms and further austerity measures. A debt haircut was also agreed as part of the deal. Greece achieved a primary government budget surplus in 2013, while in April 2014, it returned to the global bond market. Greece returned to growth after six years of economic decline in the second quarter of 2014, and was the Eurozone’s fastest-growing economy in the third quarter. A third bailout was agreed in July 2015, after a confrontation with the newly-elected government of Alexis Tsipras.
There was a 25% drop in Greece’s GDP, connected with the bailout programmes. This had a critical effect: the Debt-to-GDP ratio, the key factor defining the severity of the crisis, would jump from its 2009 level of 127% to about 170%, solely due to the shrinking economy. In a 2013 report, the IMF admitted that it had underestimated the effects of so extensive tax hikes and budget cuts on the country’s GDP and issued an informal apology. The Greek programmes imposed a very rapid improvement in structural primary balance (at least two times faster than for other Eurozone bailed-out countries ). The policies have been blamed for worsening the crisis, while Greece’s President, Prokopis Pavlopoulos, stressed the creditors’ share in responsibility for the depth of the crisis. Greek Prime Minister, Alexis Tsipras, asserted that errors in the design of the first two programmes which lead to a loss of 25% of the Greek economy due to the harsh imposition of excessive austerity.
Between 2009 and 2017 the Greek government debt rose from €300 bn to €318 bn, i.e. by only about 6% (thanks, in part, to the 2012 debt restructuring); however, during the same period, the critical debt-to-GDP ratio shot up from 127% to 179% basically due to the severe GDP drop during the handling of the crisis.
Greece’s bailouts successfully ended (as declared) on August 20, 2018.
Main article: Agriculture in Greece
Sun-drying of Zante currant on Zakynthos
In 2010, Greece was the European Union’s largest producer of cotton (183,800 tons) and pistachios (8,000 tons) and ranked second in the production of rice (229,500 tons) and olives (147,500 tons), third in the production of figs (11,000 tons), almonds (44,000 tons), tomatoes (1,400,000 tons), and watermelons (578,400 tons) and fourth in the production of tobacco (22,000 tons). Agriculture contributes 3.8% of the country’s GDP and employs 12.4% of the country’s labor force.
Greece is a major beneficiary of the Common Agricultural Policy of the European Union. As a result of the country’s entry to the European Community, much of its agricultural infrastructure has been upgraded and agricultural output increased. Between 2000 and 2007 organic farming in Greece increased by 885%, the highest change percentage in the EU.