Greek crisis - Five Key points worth noting - EaglesInvestors

Greek Crisis is not anywhere near its end even after several years of deep recession and three aid programs.

Greece officially broke up last Monday with the tutelage of its creditors in the euro-zone and the International Monetary Fund (IMF). Let’s sum up here five key points on this Greek crisis that has shaken the European Union.

Greek Crisis

The Greek crisis and its Loans: 288.7 billion

In euros, this is the Loan’s amount granted to Greece by its creditors during the aid plans.

Europeans have disbursed a total of 256.6 billion euros. And the IMF, which firstly refused to participate financially, contributed to an aid plan with 32.1 billion euros.

Most of these colossal sums will not be reimbursed by Athens until after 2032.

The Europeans have also planned, at this time, to study the possibility of further debt relief for Greece. For the moment it remains close to 180% of its GDP, which is the highest level of debt in the eurozone. The Greek crisis is far to close its chapter.

Greek crisis and Growth: -9.1%

This is the negative growth rate achieved by Greece in 2011.

This recession continued for two years, in 2012 and 2013. Afterward, Greek’s growth stagnated around 0% for three years.

It was only in 2017 that the recovery was confirmed. Indeed with a growth rate of 1.4%. For 2018 and 2019, the Commission even expects growth to be around 2%.

But the country remains far from having regained the level of activity that was it’s before the Greek crisis since it lost 25% of its GDP between 2008 and 2016.

The Greek crisis and Unemployment: 27.9%

This is the peak of unemployment in Greece in July 2013, the date from which this rate began to decline.

Last April, it stood at 20.2%, which remains by far the highest level in the eurozone, according to the European Statistical Office Eurostat.

 


source: tradingeconomics.com

According to Athens, it should fall below the 20% threshold in May, but this figure has not yet been validated by the EU.

The unemployment rate of young people – 15-24 years – remains extremely high, at 42.3% in April.


source: tradingeconomics.com

Greek crisis and Reforms: more than 450

The number of reforms adopted by Greece during its rescue at the request of its creditors, in exchange for their support.

These have affected all areas, from taxation to pensions, through health, social security, the labor market, banks or the judiciary.

Greece has even pledged, through a vote in parliament, to put in place certain measures – new cuts in pensions and tax increases – between 2019 and 2021.

Greek crisis

Budget: 3.5%

As a percentage of GDP, the fiscal effort that the Greeks have pledged to provide until 2022.

This means that over the coming years, the Greek government will have to generate a primary fiscal surplus (excluding interest on debt) of 3.5% of GDP. An extremely ambitious level to solve the Greek crisis.

For the following decades, from 2023 to 2060, the target is only 2.2% of GDP (on average) but remains so high that the IMF deems it unrealistic.

According to the international institution, only five European countries have managed to reach an average of the primary surplus of more than 1.5% of GDP since 1945 for more than ten years.

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