3. INTRODUCTION TO GREECE
• Greece is a country located in Southern Europe on
the southern end of the Balkan point possessing an
archipelago of about 2,000 islands.
4. INTRODUCTION TO GREECE
• Capital – Athens
• Currency before Euro – Drachma
• Adopted Euro as a currency in 2000
• Main sectors with greater distribution to
GDP
(a). Tourism
(b). Shipping
5. INTRODUCTION TO EURO ZONE
• A geographic and economic region that
consists of all the European union countries
that have fully incorporated the euro as
their national currency.
• The euro zone consists
of Austria, Belgium, Cyprus,
Estonia, Finland, France, Germany, Greece,
Ireland, Italy, Latvia, Lithuania, Luxembourg,
Malta, the Netherlands, Portugal, Slovakia,
Slovenia, and Spain.
6. PHILOSOPHY OF EURO ZONE
• Single Market for free circulation of goods,
capital, people and services.
• Single currency to eliminate exchange rate
transaction costs and risks.
• Macroeconomic stability (e.g. low inflation)
and financial integration of the nations in the
Euro zone.
• Each member country to become stronger
against other big economies.
7. WHY GREECE IN TROUBLE?
Just like a household that spends
more money each month than it
brings in, Greece has piled up a
mountain of debt by spending
beyond its means.
8. THE REASONS BEHIND THE CRISIS
• 2004 Summer Olympic games
• 2007 US Recession
• Increase of labor cost
• Inefficient Pension System
• Early Retirement
• Benefits
• Tax Evasion
• Euro Currency
• Mismanagement
• Corruption
9. The Greek Situation
• 400 Billion Dollars in debt
• Debt burden = 170% of annual GDP
• Unemployment rate = 25%; for people under
age 25, 50%
• 30% of population living under poverty
• Widespread unrest and rioting
• Politically and economically unstable
11. Debt in the European Union
( Fourth quarter of 2014 )
12. Possible Solutions
• Apply austerity measures and pay back all the
debt.
• Greece stays in the EU and EU eventually turns
into a single monetary and fiscal union.
• Greece exits from Euro zone
13. If Greece exits from Euro Zone
• Risk of contagion and domino effect
• Return to Drachma
• Isolationalism and effect on
globalization/trade
14. Greece only a lesson to be learnt not
a lesson to be taught
• Move faster towards the union and not away
from the union.
• Asian Union
• Eurasian Union
• American and Asian Union
and eventually a World Union.