Greece is the twenty-seventh largest economy in the world by nominal gross domestic product (GDP) and the thirty-third largest by purchasing power parity.
Greece is a member of the OECD, the World Trade Organization, the Black Sea Economic Cooperation, the European Union and the Euro zone.
The Greek economy is a developed economy with the 22nd highest standard of living in the world. The public sector accounts for about 40% of GDP. The service sector contributes 75.8% of the total GDP, industry 20.8% and agriculture 3.4%. Greece is the twenty-fourth most globalized country in the world and is classified as a high income economy.
Beginning Stage of Greek’s economy: The gradual development of industry and further development of shipping in a predominantly agricultural economy, calculating an average rate of per capita GDP growth between 1833 and 1911 that was only slightly lower than that of Western European nations. The per capita income (in purchasing power terms) of Greece was 65% that of France in 1850, 56% in 1890, 62% in 1938, 75% in 1980, 90% in 2007, 96.4% in 2008, 97.9% in 2009 and larger than countries such as South Korea, Italy, and Israel.
Cont…. The country's post-World War II development has largely been connected with the Greek economic miracle. In 2004, Euro-stat, after an audit performed by the New Democracy government, revealed that the budgetary statistics on the basis of which Greece joined the European monetary union , had been massively under-reported by the previous Greek government.
Greek economy According to Euro-stat data, GDP per inhabitant in purchasing power standards (PPS) stood at 95 per cent of the EU average in 2008. Greece is a developed country, with a high standard of living and "very high" Human Development Index, ranking 25th in the world in 2007,and 22nd on The Economist's 2005 worldwide quality-of-life index. Greece's main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum
Cont… Greece's GDP growth has also, as an average, since the early 1990s been higher than the EU average. The Greek economy also faces significant problems, including rising unemployment levels, inefficient bureaucracy, tax evasion and corruption. In 2009, Greece had the EU's second lowest Index of Economic Freedom (after Poland), ranking 81st in the world. The country suffers from high levels of political and economic corruption and low global competitiveness relative to its EU partners.
Change in Economy The economic growth turned negative in 2009 for the first time since 1993. An indication of the trend of over-lending in recent years is the fact that the ratio of loans to savings exceeded 100% during the first half of the year. By the end of 2009, as a result of a combination of international (financial crisis) and local (uncontrolled spending prior to the October 2009 national elections) factors , the Greek economy faced its most severe crisis after 1993.
Cont…. The second highest budget deficit as well as the second highest debt to GDP ratio in the EU. The 2009 budget deficit stood at 13.6% of GDP and rising debt levels (115% of GDP in 2009) led to rising borrowing costs, resulting in a severe economic crisis. This resulted from the massive revision of the 2009 budget deficit forecast by the new Socialist government elected in October 2009, from "6-8%" to 12.7% (later revised to 13.6%). This revision has seriously undermined Greece's credibility leading to higher borrowing costs for Greece.
2010 -Debt Crisis On 23 April 2010, the Greek government requested that the EU/IMF bailout package (made of relatively high-interest loans) be activated. The IMF has said it was "prepared to move expeditiously on this request". The size of the bailout is expected to be €45 billion ($61 billion) and it is expected to take three weeks to negotiate, with a payout within weeks of €8.5 billion of Greek bonds becoming due for repayment. On 27 April 2010, the Greek debt rating was decreased to BB+ (a 'junk' status) by Standard & Poor's amidst fears of default by the Greek government.
Cont…. The yield of the Greek two-year bond reached 15.3% in the secondary market. Standard & Poor's estimates that in the event of default investors would lose 30–50% of their money. Stock markets worldwide and the Euro currency declined in response to this announcement.
Steps Towards Reconstruction October 2009 - The new government discloses the 2009 budget deficit will be 12.7 percent, more than double the previously announced figure. November 2009 - The new government pledges in its 2010 draft budget to save Greece from bankruptcy by cutting the deficit while keeping electoral promises to help the poor amid the economic crisis. Final budget draft shows Greece aims to cut its budget deficit to 9.1 percent of GDP in 2010 to assure EU partners and markets it is serious about restoring fiscal health.
Cont…. On Dec 8, Fitch Ratings, which had cut Greece to A- when the government revealed the higher deficit, cuts Greek debt to BBB+ with a negative outlook, the first time in 10 years a ratings agency has put Greece below the A investment grade. A drastic overhaul of the pension system in six months and a new tax system that will make the wealthier carry more of the burden. Greece says it now plans to cut its budget deficit to 8.7 percent of GDP this year. Standard & Poor's cut Greece's rating by one notch on December 16, to BBB-plus from A-minus.
Cont… February 2010 - Papandreou says on February 2, the government will extend a public sector wage freeze to those making below 2,000 Euros a month for 2010, excluding seniority pay hikes. The next day EU Commission says it backs Greece's plan to reduce its budget deficit below three percent of GDP by 2012 and urges Greece to cut its overall wage bill and take extra fiscal measures. Greece must refinance 54 billion Euros in debt in 2010, with a crunch in Q2 as 20 billion Euros becomes due. A 5-year bond issue in January was five times oversubscribed but the government had to pay a hefty premium.