Greece Economic Problems Analysis Essay

Total Length: 1063 words ( 4 double-spaced pages)

Total Sources: 6

Page 1 of 4

Economic Environment



The economic environment of Greece is that of a capitalist economy, but with significant public sector contribution – about 40% of total GDP is from government activity. This speaks more to the relatively small size of the Greek private sector than to excessive government ownership of industry. Tourism is one of the major drivers of the Greek economy, accounting for 18% of GDP (CIA World Factbook, 2017). Thus Greece would be characterized as a mixed economy with some government-owned entities. Greece is a member of the EU, but has also received several bailouts in recent years, and struggles with tax collection, and overall economic development. Tax evasion ranges between 6-9% of total GDP in Greece, which makes it a significant economic problem (Georgakopoulos, 2016).

Recent Macroeconomic Data



In recent years, Greece's economy has flatlined. The country has received several infusions of capital from other EU countries, but there is a lack of confidence in Greece that is hampered investment at present. The GDP grew 0.4% in 2014, slipped 0.2% in 2015, and was flat in 2016. The country ranks 191st in real GDP growth rate, and 71st in GDP per capita (CIA World Factbook, 2017). Industrial production growth rate is 1.6%, ranking 124th in the world. The unemployment rate is high, at 23.6%, ranking 191st in the world, and that is not even taking into account the number of Greeks who have left the country to work elsewhere in the EU, leaving Greece with a limited-skill workforce, and even those cannot find jobs. There are no real engines of job creation, as the public sector is cutting spending as a consequence of the bailouts.
Public sector spending to GDP peaked in 2013 and has declined ever since, though remains at a higher level than pre-crisis levels, because of the lack of GDP growth (Trading Economics, 2017). The lack of economic dynamism has meant that the inflation rate is 0%, and that comes after -1.7% inflation rate in 2015 (CIA World Factbook, 2017).

Major Economic Problems



There are many economic problems facing Greece right now. High unemployment is a serious issue – while the tourism sector still contributes jobs, there is minimal investment in other industries. The government, once a prominent employer, is cutting back on its investment because it has to as terms of the bailouts (Reuters, 2017). That many of the most educated and talented Greek citizens now live and work elsewhere in the EU only makes the problems worse, because they are the ones who theoretically would be the job creators for the country.



The economic crisis came about due to a couple of factors. The aforementioned tax evasion issue remains a persistent problem, hindering the government's….....

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References

Bercetche, J. (2017) Greece hopes for debt relief as bailout program enters final 12 months. CNBC. Retrieved November 25, 2017 from https://www.cnbc.com/2017/09/01/greece-hopes-for-debt-relief-as-bailout-program-enters-final-12-months.html

CIA World Factbook (2017) Greece. Central Intelligence Agency. Retrieved November 25, 2017 from https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html

Dendrinou, V. (2017) EU audit admits Greek bailouts didn't go as planned. Bloomberg. Retrieved November 25, 2017 from https://www.bloomberg.com/news/articles/2017-11-16/greek-bailouts-left-much-to-be-desired-eu-auditors-conclude

Georgakopoulos, T. (2016) Tax evasion in Greece – a study. Dianeosis. Retrieved November 25, 2017 from https://www.dianeosis.org/en/2016/06/tax-evasion-in-greece/

Inman, P. (2015) A decade of overspending: How Greece plunged into economic crisis. The Guardian. Retrieved November 15, 2017 from https://www.theguardian.com/world/2015/jul/03/greece-overspending-defence-wages-taxation-economic-crisis

Reuters (2017). Greece offers latest effort to reform public sector, a key bailout demand. Ekathimerini. Retrieved November 25, 2017 from http://www.ekathimerini.com/221266/article/ekathimerini/news/greece-offers-latest-effort-to-reform-public-sector-a-key-bailout-demand

Trading Economics (2017) Greece government spending to GDP. Trading Economics. Retrieved November 25, 2017 from https://tradingeconomics.com/greece/government-spending-to-gdp

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