The Greek Economic Crisis
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A brief understanding of the series of events that led to the downfall of Greece. From a self sufficient nation Greece is now 323 billion pounds in debt.
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The Greek Economic Crisis
- 1. The Greek Economic Crisis Presented by Floyd Fernandes
- 2. Table of Contents • The basics. • Before it actually happened. • Contributing factors. • What happened next? • Help arrives, but at what cost? • Stats speak. • Government’s take. • Another setback. • This year. • After effects.
- 3. The Basics… • Also known as Greek depression. • Started in late 2009. • Some factors contributing to it are • The Great Recession. • Structural weaknesses in the Greek economy. • Sudden confidence drop among viable lenders. • False disclosures by the then government. • By 2012 Greece had the largest sovereign debt in history. • By June 30th, 2015 Greece became the first developed country to fail in repaying the IMF, the amount being 323 billion euros.
- 4. Before it actually happened. • With a 4.2% growth in GDP, Greece was among the fastest growing economies.
- 5. Contributing factors • Ill-planned government spending. • Balance of payments problem. • Loopholes in tax collection. • False disclosures.
- 6. What happened next? • Investigations conducted by Troika- European commission, IMF, ECB. • Real figures revealed. Greek deficit stood at 15.7% of GDP from previously believed 6%-8%. • Greek debt revised from earlier calculated 269.3 billion euros to 299 billion euros. • Bonds were sold but at a heavy price. • Private capital marketing crashed completely. • In 2010, up to 70% of Greek government bonds were held by foreign investors.
- 7. Help arrives but at what cost? • 110 billion euro bailout amount launched by troika, 2010. • Conditions imposed on Greece: • Austerity measures. • Structural reforms. • Privatization of government assets. • Second bailout required by Greece, 2011. • Bailout amount set to 130 billion euros. • Total bailout generated- 240 billion euros.
- 8. Stats speak. • Left hand side: GDP of Greece in Billions. • Peak in 2008 after which steep decline till 2014. _______________________ • Right hand side: Unemployment percentage in Greece as compared to other countries. • Highest unemployment rate in Greece.
- 9. Governments take • Low GDP growth rates. • Government deficit issues. • Budget compliance plan. • Statistical credibility.
- 10. Another setback • Greek economy was on the path to recovery. • In Q4-2014 a 4th recession took place. • Snap parliamentary election, election of SYRIZA led government. • All remaining aid to Greece suspended by Troika. • Political problems caused severe liquidity crisis. • Interest rates for the government at private lending markets spiked, private markets inaccessible to Greece once again.
- 11. This year… • 4 month technical extension granted to Greece for the bailout program. • New negotiation deal still pending at the end of May. • Package of austerity measures and economic changes approved. • Loan of 98 billion euros released hence. • Economic changes covered in the legislation include: • Raising retirement age. • Cutting pensions. • Liberalizing the energy market. • Opening up cosseted professions. • Expanding property tax. • Privatization of state assets.
- 13. After effects. • Greek economy has shrunk by a quarter since 2010. • Bailout money used for repaying loans rather than building the economy. • Debt load of government can’t possibly be repaid unless the economy begins to recover. • Greece’s relation with Europe in a delicate state. • Current bailout terms require Greece to pass more than a dozen laws.
- 14. Thanks for listening… I’ll take questions if you have any.