Greece Economy After Euro Crisis

Greece’s unemployment rate has hit another highest record in May 2013, which is 27.6%. Greece continues to suffer jobless labour market from the deep recession. Among all the labour force aged 16-24, the rate is 64.9% as the Greece sees the sixth year of recession. Jobs of any kind are scarce in today’s Greece. Deep recession have swept away a quarter of the Greece’s GDP. Greece, the country of 11 million people has lost more than a million jobs as business shut down or lay off staff.

The roots of Greece’s economic problems extend deep down into the recesses of history. After the government dropped the drachma for the euro in 2001, the economy started to grow by an average of 4% annually, almost twice the European Union average. Interest rates were low, unemployment was dropping, and trade was at an all-time high. However, these promising indicators masked horrible fiscal governance, growing government debt and declining current account balances. Greece was banking on the rapid economic growth to build upwards on highly unstable foundations. In 2008, the inevitable happened – the Greek debt crisis.

One in five jobs created in Greece is related to the tourism sector. Tourism is essential to Greece's effort for recovery from their economic crises. Every 30 or more tourists visiting Greece, creates one new job for a Greek. In 2016, Greece had 4.785 million of labor force, according to the CIA. The agricultural sector had only 12.6%, while the industry sector had 15% and the services sector had 72.4% of the country ‘s labor force.

In 1999, ten European nations joined together to create an economic and monetary union known as the Eurozone. Countries, such as Germany, have thrived with the euro but nations, like Greece, have deteriorated since its adoption of the euro in 2001. The Eurozone was created in 1999 and currently consists of eighteen European nations united under the European Central Bank and all use the euro. The Eurozone has a one point six percent inflation rate and an eleven point six percent unemployment rate in 2014. Greece joined the Eurozone in 2001 and was the poorest European Union member at the time with a two point six percent inflation rate3 (James, 2000). Greece had a long economic history before joining the Eurozone. The economy flourished from 1960 to 1970 with low inflation and modernization and industrialization occurring. The market crash in the late 1970’s led Greece into a state of recession that the nation is still struggling with. Military failures, the PASOK party and the introduction of the euro have further tarnished Greece’s economic stability. The nation struggles with lack of competitiveness, high deficit, and inflation. Greece has many options like bailouts, rescue packages, and PPP to help dig it out of this recession. The best option is to abandon the Eurozone and go back to the drachma. Greece’s inflation and deficit are increasing more and more and loans and bailouts have not worked in the past. Leaving the Eurozone will allow Greece to restructure and rebuild

There are many causes for the debt crisis to start. Before world war II Europe had very strict trade barriers between countries examples being currency exchange fees and trade tariffs. Then World War II happened and was so detrimental to Europe they couldn’t continue to have such strict trade barriers. The barriers were then slowly removed with the first barrier removal being steel and coal. This worked well enough that it caused twenty-seven countries to sign the Maastricht Treaty thus forming the European Union (UN). This made trading throughout all Europe easier which caused more trade to occur within Europe.

Before the creation of the European currency countries like Greek, Spain and Portugal had to pay high interests on the amount of money they borrowed form banks. At the same time, international Banks were not comfortable enough to lend them too much money. For this reason, economically weak countries like Greek, Spain and Portugal had to balance their budget and spending. After Greek and other European counters joined the EU, they were given vast access to capital in a form of loans, and the amount of money they borrowed increased rapidly. Smaller counters suddenly had lager access for credit like never before so they borrowed money and built houses, roads, and health sectors. Even If the EU member states were unable to repay their loans economically strong countries like Briton, and germen would stepped in and cover some of the loses because they were now bound by a common currency. With a few years, the governments of Greek, Portugal, and Spain accumulated huger debt. However, they were able to repay this debt with more borrowed money. Credit flowed debt accumulated and the economies of Europe became tightly intertwined. Finally, the 2008 financial crisis brought borrowing to a

Europe’s debt crisis was initially triggered by events in the American banking sector. When a slowdown in the US economy caused over-extended American homeowners to default on their mortgages, banks all over the world with investments linked to those mortgages started losing money.

Especially in recent years, ongoing budget deficits have led to the rapid growth of public debt. Vietnam’s total public debts have increased from about 40 percent of GDP in late 2007 to 57 percent of GDP at the end of 2010 and only declined slightly in 2011. At the same time, Vietnam’s foreign debts have surged

The genesis of the euro zone crisis has a stark difference from that of the crisis in US that gripped the global economy. The euro zone was characterized by greater social housing facilities and lower subprimes lending. According to Connor et al., 2010, even Ireland did not experience trouble with subprime mortgages despite the affect of higher-end speculation, including in commercial property, on property price bubble. European financial institutions were not so actively engaged in the issuance of CDOs and derivative instruments. As a bloc, the euro zone had not seen high capital inflows and did not have an external payments deficit, several euro zone countries, however, saw an in increase in house prices and current account deficits.

The structural economic support weakened –when Greece entered the euro zone in 2001 the convergence criteria which supposed to provide sound financial systems within the economy and the GSP were established to prevent financial and economic crises. Greece entered the euro zone without meeting the requirements of the convergence criteria, how this might have happened is due structural failures or a political failure of European leaders, this put Greece already at a disadvantage plus

European sovereign-debt crisis is still going on in some countries in eurozone, such as Greece, Spain, Ireland, Portugal. The origins of these crises started from Greece when the government borrowed a huge amount of money from foreign investors and was unable to repay. As a result, a financial crisis started to hit Greece as the starting point of the crisis over countries in Eurozone. While the old deutschmark (DM) bloc – Germany, France, etc. experience lower than average growth and inflation, the Eurozone experienced the contrary. In general, instead of global factors as the causes of the crisis, the Eurozone itself should hold responsible for the start and spread of the crisis.

According to Cia.com, Greece has a capitalist economy with a public sector, representing about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 18% of GDP. However, immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP.

The creation of the single European currency has exacerbated the nature and extent of the Eurozone sovereign debt crisis.

Although a commonly accepted view is that the hidden budget deficit in Greece is the beginning of the European sovereign debt crisis, the real causes of this economic crisis can be various. To reveal the whole event, a comprehensive review of the background is

The Euro Crisis is the failure of the Euro, the currency that binds all 19 countries of the Eurozone together. The tightly knit nature of this economy means that if even one country’s economy fails, Europe as a whole goes with them. This currency, which was originally created to stimulate economic growth, has become the cause of much accumulated debt.