Greek government-debt crisis

The Greek government-debt crisis happened after the financial crisis of 2007–08. In Greece it is known as The Crisis (Greek: Η Κρίσηcode: el is deprecated ). It started with sudden reforms and austerity measures. But this made people poor and lose money and land.

The Greek economy is in the longest recession of any advanced capitalist economy to date. It is even longer than the US Great Depression. Many well-educated Greeks left the country.

A trade deficit means that a country is buying more than it produces, so it has to borrow from others. Both the Greek trade deficit and budget deficit rose from below 5% of GDP in 1999 to peak around 15% of GDP in the 2008–2009 periods. Greece was perceived as a higher credit risk alone than it was as a member of the Eurozone. Thus investors felt the EU would help out Greece.

Reports in 2009 of Greek government disorganization increased borrowing costs. Greece could no longer borrow to finance its trade and budget deficits at an affordable cost.

The Great Recession

The Greek crisis was triggered by the Great Recession, which led the budget deficits of several Western nations to reach or exceed 10% of GDP. Greece had high budget deficit (10.2% and 15.1% of GDP in 2008 and 2009, respectively). But at the same time it had high public debt to GDP ratio. Greece appeared to lose control of this ratio, which already reached 127% of GDP in 2009. Being a member of the Eurozone, the country had essentially no autonomous monetary policy flexibility.

Internal factors

In January 2010, the Greek Ministry of Finance published the Stability and Growth Program 2010. The report listed five main causes: poor GDP growth, government debt and deficits, budget compliance and data credibility. Causes found by others included excess government spending, current account deficits, tax avoidance and tax evasion.

Greek Government-debt Crisis Media

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  Greek bonds

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  Greek GDP*

    Real GDP (chained 2010 Euros)

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    Nominal GDP
• Relative change in unit labour costs, 2000–2017

• RULC Europe.png

  Real unit labour costs: total economy (ratio of compensation per employee to nominal GDP per person employed)

• European debt to GDP ratios.webp

  European debt to GDP ratios*

    Greece

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    Italy

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    Spain

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    Portugal

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    France

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    Ireland

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    Germany
• HellenicOeconomy(inCurrentEuros).png

  Combined charts of Greece's GDP and debt since 1970; also of deficit since 2000. Absolute terms time series are in current euros. Public deficit (brown) worsened to 10% in 2008, 15% in 2009 and 11% in 2010. As a result, the public debt-to-GDP ratio (red) rose from 109% in 2008 to 146% in 2010.

• Current account imbalances EN (3D).svg

  Current account imbalances (1997–2014)

• Greek debt and EU average since 1977.png

  Greece's debt percentage since 1977, compared to the average of the Eurozone

• 20110630 Indignados Syntagma general mass Athens Greece.jpg

  Protests in Greece during the debt crisis

• 2011 Greece Uprising.jpg

  100,000 people protest against the austerity measures in front of parliament building in Athens (29 May 2011).

Bibliography

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