The Greek Economy
At a Glance
Official Name: Hellenic Republic
Eurozone Status: Member
GDP 2014: 179 billion Euro (at current prices). GDP for 2014 reached 186.5 billion Euro at constant prices of 2010.
The Greek economy, having achieved high growth rates until 2008, showed signs of recession in 2009 as a result of the global financial crisis, and from 2010 onwards the recession intensified considerably due to country’s fiscal imbalances. The need for consolidation led the country to embark on a trilateral mechanism of financial support, comprised of the EU, the IMF and the ECB. The restrictive income policy and drastic limitation on public expenses during the past five years have had a negative impact on GDP growth, leading to its decrease by 5.4% in 2010, 8.9% in 2011,6.6% in 2012 and 3.9% in 2013 (constant prices of year 2010). During 2014, the Greek economy returned to positive growth rates of 0.8%.
The public deficit decreased from 15.3% in 2009 to 11.1% in 2010, 10.2% in 2011, 8.7% in 2012, whereas in 2013 was increased by 12.3%. In 2014, the public deficit decreased significantly reaching 3.5% of GDP, while in 2013 and in 2014 a primary surplus was achieved.
A significant improvement in the development trends of economic indicators is expected this year through the acceleration of reforms aimed at the development of a more attractive investment and business environment, including liberalisation of a number of markets, faster licensing procedures, the Investment Law, flexibility in the labour market, and a reduction in the cost of production factors due to the crisis. In 2014, the Greek economy returned to positive growth rates of 0.8%.
Unemployment in Greece, up to 2008, was relatively low at 7.8%, approximately the Eurozone average. During 2009, unemployment rose as a result of the international crisis that also affected Greece and reached 9.6%. In 2010 unemployment showed a further increase, at 12.7%, as a result of the restrictive fiscal policy due to the debt crisis. In 2011, unemployment rose further to 17.9%, in 2012 exceeded 24% and in 2013 reached 27.5%, as a consequence of the general economic crisis and the measures applied towards fiscal consolidation. In 2014, for the first time since the beginning of the crisis, a slight decrease in unemployment is noted, however it remains at the very high levels of 26.5%.Youth unemployment, which exceeds 50%, is one of the major problems arising from the domestic economic crisis.
In 2014, the gross fixed capital formation in Greece reached 20.7 billion Euro at current prices, showing an increase of 1.3% compared with the levels of 2013 (20.5 billion Euro). This slight increase is noted for the first time in recent years, following a series of significant decreases due to the drastic reduction of public expenses and the restrictive fiscal policy resulting from the economic crisis in Greece.
Despite the domestic crisis of public debt and Greece’s inclusion in the IMF- EU – ECB support mechanism, total (gross) inflows of foreign investment capital, which essentially reflect the real performance of the country in attracting investment, decreased by 24,4% in 2014 in comparison with 2013 , but are still higher by 30.7% in comparison to 2012.
Net FDI inflows of foreign investment capital during the same year decreased in comparison to 2013, by 22.9%, however in comparison to 2012 they remain increased by 20,9%.
The export of Greek goods during 2014 decreased by 1.5% in comparison to 2013, reaching 27.2 billion Euro. Imports to Greece in 2014 amounted to 47.7 billion Euro whereas in 2013 they reached 46.9 billion Euro, increasing by 1.7%. The increase in imports in 2014 and the slight decrease of exports have resulted in the slight increase of the trade deficit of Greece, in 2014.