GDP Growth rate 2010 -3.4%
2011 -6.9%
Fiscal deficit in 2009 15.4% of GDP
Debt 2011 147% of GDP
2012 198% projected.
The maximum sustainable level of debt is 120% of GDP as per economists.
One can see from the above figures how miserable the position of the Greek economy is.
The country suffers from high levels of political and economic corruption and low global competitiveness compared to other European nations.
Successive Greek governments have, among other things, customarily run large deficits to finance public sector jobs, pensions, and other social benefits. Greece has a very high Human Development Index which indicates a high level of standard of living by the people.
A problem Greece has suffered from in recent decades is the government's tax income. Each year it is several times below the expected level. In 2010, the estimated tax evasion costs for the Greek government amounted to well over $20 billion per year.
To keep within the EU guidelines, the government of Greece had for many years misreported the country's official economic statistics. At the beginning of 2010, it was discovered that Greece had paid Goldman Sachs and other banks hundreds of millions of dollars in fees since 2001, for arranging transactions that hid the actual level of borrowing. The purpose of these deals made by several successive Greek governments was to enable them to continue spending, while hiding the actual deficit from the EU. These bankers with high reputes from the US indulged in fudging of figures for money. Makes one wonder if the other highly reputed firms can be believed.
The rating agencies downgraded the Greek economy to junk status in 2010 putting a stop to their chances of raising any further debt. So, Greece has no choice but to survive on aid from the EU countries. Greece has splurged borrowed money to maintain its lifestyle and had to pay the price.
A cousin of mine travelled extensively in Europe. He had visited the continent as a tourist on 5 occasions with 2 months for each trip. Thus he has covered all the countries of Europe and has told me that Greece and its living has impressed him the most. This is a great case of how appearances can be deceptive.
