2024-05-01 05:13:35
In their article, the Financial Times stands in the historical context surrounding the recovery of Greece after the pandemic, stressing that the country has strong performances, but is at the same time the poorest in the Eurozone.
As mentioned in the publication, last week, the S&P rating agency revised the country’s outlook to “positive”. The Financial Times stands by Eurostat’s new figures for the reduction of public debt in terms of GDP to 162% in 2023. They also point out that the Greek economy as of 2019, before the pandemic, was growing at almost twice the rate of its euro zone.
The FT cites a statement from BNP Paribas economist Guillaume Derrien, who said “renewed political stability and strong fiscal consolidation make Greece a much more attractive country for investment than in the past.”
However…
However, as the article points out, the latest recovery has only slightly raised the standard of living of Greeks compared to the EU average. in recent years – and not enough to dislodge them from their position as the poorest in the Eurozone.
As the FT reports, GDP per capita was similar to that of the EU average. until 2009. Since then, 10 countries have seen living standards surpass that of Greece. Now, Greece is the second poorest country in the EU. after Bulgaria and remains last in the Eurozone. “As the gap with Bulgaria narrows sharply, it is not unreasonable to expect that Greece will soon become the poorest country in the EU.” the FT points out.
How do these contrasting stories of strong recovery and poverty coexist? The answer, according to the FT, lies in the wake of the financial crisis and the austerity that followed. Greek spending was cut and taxes raised to secure a bailout from the IMF and the EU, squeezing businesses and households and collapsing the economy, the report said. As noted, the extent of economic damage was rare in peacetime.
As a result, the Greek economy is currently around 19% smaller than it was in 2007 – despite the country’s strong post-pandemic recovery – while the EU economy as a whole it has grown by 17%. The financial blow is almost unprecedented in modern times, comparable only to the US Great Depression of the 1930s, George Lagarias, chief economist at Mazars Wealth Management, told the FT.
As the FT reports, real wages fell steadily until 2022 – the latest OECD data available – falling by 30% from pre-crisis levels. They also state that there are concerns about the country’s long-term economic prospects, against the background of climate change and the demographic problem.
Overall, Greece’s economic recovery should be celebrated, but it must be seen in the context of a remarkable economic crisis that has left the country in a hole that Greece may climb out of a generation later, the report concludes.