Greek EconomyIn May 2010, Greece experienced its first economic bailout from the International Monetary Fund and the European Union to rebuild the Greek economy. As a result, Greece was given $146 billion in loans. Greece suffered economic frailty, in part from hosting the 2004 Olympic Games, the global economic crisis, and switching to the euro. Then, in August 2018, Greece received its final loan from European creditors. This loan signaled the end of the bailout program that began in 2015. To work toward financial security, Greece has committed to running a budget surplus until 2060 and accepting continued support from the EU.

Despite this financial turmoil, tourism presents a bright light for the Greek economy in increased revenue. Tourists’ interest in Greece began to boom during the 2004 Olympics, held in Athens. Although the Olympics have been cited as the main cause of the economic crisis in Greece, tourist industries in Athens were surveyed and concluded “the Games upgraded the validity of Athens on the international tourist market.” Since the 2004 Olympics, Athens, on average, has lengthier tourist stays than other major urban destinations, such as Paris and Barcelona. Athenian hotels have also become more efficient since the Games. And ticket purchases for historical sites have also seen an incline.

Tourism Helps the Greek Economy

This surge in tourism has sparked a large revenue intake for the Greek economy. In 2018, travel services in Greece reported an intake of 16 billion euros, approximately $18 billion, up 14 million euros since 2017. They attribute this surplus to a 40 percent increase in travel receipts and a 53 percent increase in travel sales. That year, the effect of tourism on Greece’s gross domestic product was an estimated 20.6 percent, reaching $44.6 billion. In fact, this is double the global average of 10.4 percent. This means one out of every five euros spent in Greece stems from travel and tourism.

Greece is happy with how tourism initiatives have been implemented in the past several years. The country also acknowledges 988,000 jobs lie in its tourism and travel industries. In 2019, Greece expects this job market to reach 1 million jobs. As such, travel and tourism is the largest employer in Greece. Minister of Tourism of the Hellenic Republic Elena Kountoura has noted Greece’s plan for the continued growth of the tourism sector: “We intend to maintain Greece’s strong momentum in tourism and maximize its benefits for the local communities across Greece, acknowledging tourism’s immense value as a major driving force for employment, economic and social prosperity.”

The reparation of the Greek economy has developed a dependence on tourism and travel. From the deep blue waters of the Aegean Sea to historical sites such as Delphi, people from all over the world flock to witness a small piece of Greece’s beauty. What they may not realize, however, is they are working to support an economy on the mends. And the positive effect of tourism will continue to increase annually, as Greece works toward financial stability.

Claire Bryan
Photo: Flickr

Poverty in Greece
For the past few years, Greece has required heavy subsidies from the International Monetary Fund (IMF) in conjunction with the European Union (EU) to avoid collapse. However, despite these heavy subsidies, the Greek economy continues to contract, and poverty in Greece is maintaining concerning rates.

The New York Times has compared this crisis to the infamous Great Depression in the United States during the 1930s. When these two timelines of GDP decline are placed in conjunction with the economic descents of the two countries follow the same trajectory.

The single difference between these two scenarios is that after four years the U.S. economy began to progress upward again. Inversely, the Greek economy has maintained constant economic contraction, averaging a negative growth of 25 percent GDP for the last four years.

Since the beginning of the crisis, the IMF and neighboring nations of the EU have poured over €260 billion into the flailing economy and have pledged an additional 86 billion euro to mitigate the extreme poverty that is spreading throughout the country. But even with these efforts, the Greek economy continues to shrink.

The effects of the steadily contracting economy have resulted in over a quarter of the population being unemployed, over 30 percent of the population living below the national poverty line and nearly one-fifth of the adult population not being able to feed their children. Charity organizations are running at full throttle, and some have worried at times if there will be enough food to go around.

The North American economist, Daniel Altman, has observed the fiscal problems that are being faced by Greece and has proposed several unpopular but effective ways in which the economy and reduction of poverty in Greece could make a rebound. He affirms that his prescribed measures would not be easy, but they would be possible to implement.

The first action Altman recommends is to default officially. The trade from Greece has been resulting in very low ingression of profit, and the government debt is continuing to accumulate in the background. Though defaulting on their debt would mean years of frozen access to global markets, it would also stop the progressing debt in the long run.

Secondly, the euro should be eradicated from the Greek economy. As it stands, the government cannot use inflation to its advantage since the euro is a transnational currency. A return to the Greek drachma could necessitate the aforementioned default and an initial scare would be probable, but in the long term, a return to domestic currency would set Greece in a position for economic progression.

In addition to these suggestions are the procedures for tax elevation and a decrease in the public budget. Altman affirms that these are never popular choices, but they are necessary for recovery. Many of these actions are already being imposed as necessary conditions for the reception of bailout funds from the IMF and the EU.

Additionally, an innovative way in which Greece could reduce public debt and put its economy back on track would be through liquidation of land assets. Greece has thousands of islands and large portions of ethnically Turkish, Albanian or Macedonian lands that could be sold.

Altman affirms that neighboring countries would pay large amounts to acquire lands that are largely inhabited by their people, thus alleviating poverty in Greece and putting a dent into the national debt.

Regardless of how this issue is approached, it seems that poverty in Greece is not going to be reduced without any sacrifices.

Preston Rust

Photo: Spiegel

Eyes have centered on Athens in recent weeks as Greece has attempted to manage its overwhelming debt. This is the climax of a five year decay that has left Greece’s finances at a standstill and its healthcare system in critical condition. With banks limiting withdrawals to just 60 euros per day, it is hard to tell which has become scarcer, money or medicine.

Since 2010, Greece’s public healthcare system has decreased its spending on drugs by 32 percent and at the same time owes 1.2 billion dollars to international drug manufacturers. This reflects an overall declining trend; between the years of 2009 and 2012, government healthcare spending fell by 25 percent.

These reductions are visible throughout treatment centers in Greece. One of the largest hospitals in Athens, Gennimatas General Hospital, has faced shortages of antibiotics. It also lacks the budget to fix its damaged medical equipment which has resulted in week long waits for procedures such as CAT scans and MRIs.

Unfortunately, healthcare struggles such as these have become common to Greeks. Currently, 27 percent of people lack employment which has led to a significant loss of healthcare coverage. Many can no longer afford even government subsidized insurance while free health care eligibility has become much more stringent; 2.5 million people, essentially a quarter of all Greeks, lack health insurance.

Even though less people have coverage, the usage of Greece’s public healthcare system has spiked. As the crisis escalated in 2010, public inpatient and primary care services experienced six percent more usage. Just one year later, this figure had more than tripled to nearly a 22 percent increase in healthcare usage. With fewer funds but even more people to treat, the system is folding in on itself.

Years ago, before the recession triggered Greece’s current crisis, significant faults in Greece’s health care already existed and hinted at an eventual failure. During the first decade of the 21st century, its healthcare system experienced massive and untenable increases in expenditures.

According to a World Health Organization Report, from 2003 to 2009, “general government spending rose from 59.5 percent to 70.3 percent of total health spending.” Pharmaceutical spending also increased by 80 percent, from 293 euros per capita in 2003 to 528 euros per capita in 2010. In 2009, as Greece approached the end of the decade, it had accumulated a 50 billion euro healthcare deficit.

Inefficient management, ineffective distribution of medical resources and increasing government spending on hospital debts were the main culprits behind the healthcare bubble, and its inevitable bursting.

Today, average Greeks can feel the unpleasant consequences of years of mismanagement. Those who arrive at Greece’s underfunded hospitals for treatment can often expect underhanded tactics like informal doctoral payments, which are essentially bribes. In one instance, a women who given birth in a hospital was prohibited from receiving her baby until her payments were made.

While more prominent hospitals like Evangelisimos do not wield these dishonest methods, their conditions are still poor. Even as the largest hospital in Greece, Evangelisimos still lacks enough beds and recently has run at 10 to 20 percent beyond its capacity. A patient noted that her single room that was crammed with three beds yet only housed one other person. This was due to a ceiling collapse that had obstructed the third vacant bed. Without funds to repair the damage, the hospital was forced to continue using the room.

Problems are not just contained to hospitals and treatment centers; the decline in prosperity itself has led to health issues across the nation. Since the crisis, suicides have increased dramatically in Greece. Between the years of 2010 and 2012, they rose by 35 percent.

Nutrition and obesity have become another burgeoning health issues as families have struggled to afford healthy foods. Experts have noticed this increase in particular among Greece’s poor. Ironically, economic down turn has also caused many to eat more at home to save money, with the consumption of pizza and fast food having fallen by over 20 percent.

In order to revive the Greek healthcare system, the nation’s government, the ‘troika,’ consisting of the European Commission, the International Monetary Fund and the European Central Bank have planned a set of strategies.

For these groups seeking solutions, the name of the game is efficiency. They have planned to overhaul Greece’s healthcare administration, hospitals and districts in order to effectively distribute healthcare resources evenly throughout the country. In order to prevent unchecked spending like before they have advised greater financial oversight.

While the Troika faces the resistance of residual bad habits, they hope for Greece to emerge from its healthcare crisis with a well-planned and functional health care system. And it seems that it has that potential: among its European Union peers, Greece actually has the highest concentration of physicians. Now, the nation must work to develop a system through which both its doctors and patients can thrive.

Andrew Logan

Sources: World Health Organization, The National Center for Biotechnology Information, CNN, The Washington Post, The Guardian
Photo: 99GetSmart

Young owners of Greek startups are finding their businesses launched onto the international market directly after conception.

With economic degradation and youth unemployment at 50 percent, many are faced with a choice: to join the brain drain and move to Western Europe or to stay home and fight to make a living amongst stagnant mainstay industries such as shipping, olive oil, cheese and tourism. Very few jobs in the traditional sectors are available, and the country has long been resistant to global competition and innovation. With a bailout and increased regulation looming, the Greek economy hardly seems like the ideal ground to plant a business.

And yet, in this backwards business environment, the young entrepreneurial class is making it work. They are calling on Greece’s ancient mercantile roots to foster a host of new companies that are taking the initiative to begin rebuilding the country’s faltering economy. These young workers have taken advantage of the end of regulations, protections, tax breaks and provisions that have sheltered Greek businesses for years and hindered competition and new ventures.

Investors, both Greek and international, have jumped on the bandwagon as well. The Hellenic Initiative, a nonprofit sponsored by Greeks abroad, funds business initiatives including a custom folding bicycle designer, cosmetic safety lab and online fuel auctioning website.

Such companies have received funding from investors in Europe, the U.S. and Australia. Other examples of growing companies are Taxibeat, an Uber-like driving service and Workable, an employment tool that is now used in small and medium-sized companies in 39 countries.

With a large population of well-educated young labor force eager to work and jump into a new sector, workers are relatively inexpensive to employ and exhibit more loyalty to start-ups.

“There is no shortage of really smart kids, driven kids, with a lot of zeal and a lot of drive, a lot of hunger, and a pretty good business plan,” said Jeremy Downward, an investor for Alpheus Advisors.

Although many start-ups remain small and employ fewer than 20 people and can not transform the Greek economy alone, workers stay positive.

“Talking about all the negative aspects of this huge economic depression in this country doesn’t help that much. It helps if you can start building something that makes sense, and makes sense both for business and for society,” said start-up founder, Dimitris G. Kalavros-Gousiou.

Jenny Wheeler

Sources: New York Times, BRW
Photo: New York Times

greece_bailoutAs negotiations continue between Greece and its creditors, the Eurozone has agreed to a four-month extension of the current bailout, which was due to expire by the end of February. This will give the two sides more time to negotiate without the imminent threat of a default.

In return, Greece has proposed a series of reforms. The reforms focus on cracking down on corruption and tax evasion, two serious problems that have plagued Greece since before the economic crash. Syriza has also agreed to reform some of its laws and economic regulations. They hope these reforms will increase tax revenue and prevent them from having to make any major spending cuts.

Both sides have had to make compromises. For its part, Syriza has agreed not to raise the minimum wage or rehire laid off civil servants as it had originally hoped. In return, the Eurozone has agreed to increases in social spending and other policies aimed at tackling poverty in Greece, which Prime Minister Tsipras has repeatedly called a “humanitarian crisis.”

The statistics echo that sentiment. Since the crisis began, Greece’s economy has shrunk by a quarter. Unemployment stands at 25 percent, while youth unemployment exceeds 50 percent. The government has decided to freeze wages to prevent more public sector wage cuts. It also plans to provide public housing and health care to the unemployed. Syriza also plans to review all privatization deals that have not yet been implemented.

All three major creditors, the IMF, the European Central Bank and Eurozone, leaders appear to support the reforms as a good start. While European parliaments still have to vote to approve the bailout extension, it is expected to pass.

The IMF has been more critical, saying that while it views the reforms as a good starting point for negotiations, they do not go far enough for it to approve more bailout money on its part. Both the Eurozone and the ECB would also like to see more reforms, and even before the bailout extension has been formally approved the two sides have already resumed arguing over future terms and conditions.

Syriza has continued to demand debt cancellation and renegotiation of payments, warning it is not sure it will be able to meet upcoming payments on some of its loans. There is also talk of a new bailout program after the extension expires as some economists warn Greece is still in need of financial assistance. While Greece and the Eurozone have just averted a major crisis, both sides are in for tough negotiations in the months to come.

– Matt Lesso     

Sources: BBC, The Globe and Mail, The New York Times, Reuters, The Wall Street Journal
Photo: Business.Financial Post