Greece has struggled financially since the 2008 global crisis. While most economies pulled out of their recessions relatively quickly, Greece's "great depression" lasted from 2010-2016. This was due to many factors, including their reliance on tourism, overspending on transportation, and their inability to even cause inflation because of the constant pricing of the Euro. To get out, it took major austerity measures, but because of the many factors involved, the Debt to GDP ratio continued rising. Many educated people left, people defaulted on their loans, and the economy remained in a relative state of disarray for the last decade. Even today, things in Greece cost much less than much of Europe and the United States, and the Coronavirus pandemic has only further hurt their economy.
"Greece appears to have experienced a very deep recession in 2020 and even under optimistic assumptions, a full recovery will take some time beyond 2021. In addition, the recession and the cost of the measures to mitigate it have already led to a further sharp rise of Greece’s already exorbitantly high public debt."
The short term solution is to continue to distribute bonds, but this becomes an issue when this further raises the countries debt. This will create a huge issue without some improvement in the economy, and with the country still so reliant on tourism, the pandemic has been a perfect storm to further complicate their economy. Austerity measures, after years of use, will not encourage more growth in the economy either, only release some pressure. What, then, is the solution?
"...‘gradual adjustment’. This is how the public debt of the US, Britain, and other European economies fell relative to GDP after WWII. This is also the way in which Greece had stabilised its debt-to-GDP ratio during the 1994-2007 period of recovery and growth. However, this solution has an important pre-condition: The nominal yield of government bonds must remain lower than the sum of GDP growth and inflation for a relatively long period."
Gradual adjustment requires lowering interest rates, and encouraging spending, but over a long period of time. Although not the quickest nor least risky option, in the state Greece is in now, I believe its best bet is to trust their citizens instead of writing debt off to other nations. By allowing the economy to heal itself instead of paying it off, Greece saves itself from the hole it has found itself in for the last decade.
The minute I read the title I knew I had to read your post. One of my close family friends is Greek, and while they always speak of the corruption of their economy, I was never educated enough to engage in conversation with them, or even know the right questions to ask. You wrote an extremely informative post on Greek’s financial depression and I truly enjoyed the path you took the audience on. With every problem you posed a solution that ran into another problem, creating a cycle in narrative much like the unfortunate cycle in Greece. It was a breath of fresh air to read a more economically focused blog post and I feel much more knowledgeable after reading…
I thought that this was a very insightful blog post that contained a lot of information about what is going on in Greece that I wasn’t aware of. I knew that their economy was struggling, but I didn’t know how badly. I think that the COVID-19 pandemic played a huge role in this like you discussed with so much of their economy relying on tourism. There are so many countries in this world that are struggling economically because of the pandemic. I think you also offered up very viable solutions and I look forward to continuing to read your posts.
I am so glad you discussed this about Greece. I have heard about their economic problems long before the 2008 crisis. My family has been there multiple times and you can tell the long lasting affects that the economic issues have had on the country. Sadly as Greece you already had mentioned Greece depends on the value of the Euro for its lackluster economy to survive. A problem that can arise from this as countries potentially break off from the EU and become nation states, Countries like Greece could become devastated.
This blog provides much information about Greece that I was unaware of. I didn't know Greece was going through a Great Depression during the time that they did. The blog explains though how Greece recovered from their 2008 recession. Something that caught my attention was in 2020 Greece had experienced another recession and it will be past 2021 until full recovery.
This blog provides a great explanation of Greece's slow recovery from the 2008 recession, as well as a fleshed out solution to mitigate these financial woes. I especially agree with the point that details why Greece, among other European countries heavily impacted such as Ireland and Spain, suffered a great deal is due to the fact that they were all fixed on the Euro. With a floating currency, these countries could have made their goods cheaper for other countries which would have increased exports, thus bringing money back into the country. The economies would have grown faster and perhaps could have exported their way out of the recession.