About 15 years ago, Greece shook the foundations of the European Union (EU). With a budget deficit equivalent to 13% of its gross domestic product (GDP) in 2009, a debt of over 113% and its economy on the brink of the abyss, the Greek government was forced to accept a bailout in exchange for austerity measures. . Rule budgetary. Eight years, three bailouts and 203.770 million euros later, the country managed to recover enough for itself, ending that program. Now, in a turn of events, the Balkan nation has become one of the fastest growing within the euro zone. “A European growth tiger” in the words of Barclays analysts.
According to the World Bank, Greece is the second poorest country in the European Union, its GDP has not yet recovered from the financial crisis – it is up 24% compared to 2008 – and the Greek national debt is the highest in the euro area – approximately 199.44% of the monetary value of goods produced in the Hellenic country Statista- K According. Also, government bonds have not been able to get rid of the junk rating, despite the efforts of various governments. Even then, The Greek economy grew by almost 6% last year compared to 2021, Even more significant figures compared to France, which expanded by 2.6%, and Germany, which expanded by only 1.9% in 2022.
According to Alex Patelis, chief economic advisor to the Greek prime minister, Greece’s economic growth is due to measures taken over the past four years, including cutting taxes and cutting red tape. These, along with reforms carried out during the most difficult years of the crisis, ended the campaign. Growth in exports and their contribution to GDPA greater attraction of foreign investment and the creation of more businesses, as well as better job opportunities.
Tourism, the main engine of the Hellenic economy, has risen strongly from the ravages of the pandemic, Despite skyrocketing inflation, according to data from the Bank of Greece, in 2022 the sector is set to touch a record number recorded three years ago, reaching 27.8 million visitors. Looking to 2023, Tourism Minister Vassilis Kikilias expects a 20% increase.
Other sectors that have increased their contribution to Greek GDP are shipping and oil refining. And it is that Greece’s shipping companies have taken advantage of the fact that many oil tankers have ended their commercial ties with Russia because of the war in Ukraine and Western sanctions. take your place and do business,
simultaneously, Greece is seeing its tech sector flourish, This is a very new ecosystem, with a life span of less than a decade, which hasn’t stopped its startups from attracting foreign investment – they raised over 7,040 million Euros – and their market capitalization to approach $10,000 million in 2022 Was. And they are not only those who have seen them. Google, Amazon and Microsoft already have their own cloud computing or data centers in the Balkan region, while Pfizer opened a research center in the city of Thessaloniki. According to the Patels, multinationals are betting on the country not because it is cheap, but because it is stable, The Wall Street Journal reported.
However, everything is not going the way the Greek government wants. It is true that manufacturing exports have increased, but imports have increased, due to which a major trade deficit, While officials blame this imbalance on a rise in energy prices in 2022, economists point out that it is due to the fact that “Greece’s production base is not broad enough to support increased demand from internal sources”. The question is that if this continues, then the country may be forced to depend on foreign debt as before.
before its third economic megacycle
Despite this, both Paolo Gentiloni, the European Commissioner for the Economy, and analysts at Barclays believe Greece has growth potential. In the case of the European Commission, it expects the Greek economy to expand “double the Eurozone average” in 2023, with 2.4%. The financial entity, for its part, holds in a report that the country may find itself on the brink of the third economic megacycle.
Greece is not your typical economy that goes through 7-8 year cycles, notes Barclays. Instead, it has had two megacycles since World War II, both deeply linked to structural forces and political choices.
The first of these megacycles resulted from the advent of the Marshall Plan, foreign economic supervision, and protectionist industrial and exchange rate policies to rebuild Europe in the mid-1950s and 1970s. “Greece, although starting from a low base, recorded its own growth rates for years, especially among fast-growing emerging economies of the time, such as South Korea,” the unit detailed in its report. But political instability and the fragility of democratic institutions meant that this period was followed by a prolonged decline in activity, which lasted until the early 1990s.
The second economic great cycle followed soon after and was characterized by an increase in public debt and external financing, as well as consuming an excessive share of potential income and operating at an uncompetitive level of costs, which left the Greek economy on the fringes. of collapse between 2010 and 2019.
Barclays says the signs of a new megacycle are now clear. In making these statements, the entity is based, on the one hand, on the country’s opening up to the region, allowing it to be an internationally competitive commercial sector for the first time in its post-war history. On the other hand, services already represent 75-80% of Greece’s GDP. Furthermore, the country is benefiting from new approaches introduced in the EU’s cross-border policies. And, finally, that its activity does not have as many imbalances as in the past, but that it has opted for structural reforms and investments in infrastructure and is supported by European funds, reports the Greek Reporter.