Greece Recession Story

1. GREECE RECESSION
STORY
BY
VANITHA

2. Abstract.
 The severe economic crisis affecting Greece is widely expected to have a
significant social impact in terms of greater inequality and increased poverty.
 They provide an early assessment of whether (and to what extent) this is
the case. More specifically, we distinguish between two inter-related factors
 on the one hand, the austerity measures taken to reduce fiscal deficits; on
the other hand, the wider recession.
 Using the European tax-benefit model EUROMOD we attempt to quantify
the distributional implications of both. With respect to the austerity
measures, we focus on the changes introduced in spring 2010 affecting
income tax, pension benefits and public sector pay. With respect to the
wider recession, we model the effects of rising unemployment and inflation,
as well as of lower earnings for self-employed workers and for employees of
private firms.

3. Continue….
In simulating the impact of these changes on
the distribution of incomes (and in estimating
how the total burden of the crisis is shared
across income groups), we take into account
tax evasion and benefit non take up. We end
by discussing the methodological pitfalls and
policy implications of our research.

4. 1. How much debt is Greece in?
The country's total debt amounts to €323bn (£230bn; $356bn), which they
owe to various countries and banks within Europe.

5. 2. When does it have to pay it back?
 Since 2010, the athens government has been reliant on two european
union-international monetary fund (IMF) bailouts totalling €240bn.
 Greece's last cash injection from international creditors was in august 2014,
and when the eurozone agreement ran out on 30 june, the greek
government failed to make a key debt repayment to the IMF of €1.5bn.
 While the IMF says greece is "in arrears", the european financial stability
facility - a body established in 2010 to help resolve the eurozone crisis -
says that constitutes a default.
 Following the referendum, eurozone finance ministers now say they expect
to hear new proposals from greece.

6. 3. Why is it in so much trouble?
 Critics point out that Greece's problems can be traced back to before it joined the
euro in 2001, when it was living beyond its means.
 After it adopted the single currency, public spending soared. Public sector wages, for
example, rose 50% between 1999 and 2007 - far faster than in most other eurozone
countries. The government also ran up big debts paying for the 2004 Athens
Olympics.
 After years of overspending, the country's budget deficit - the difference between
spending and income - spiralled out of control.
 Then, when the global financial downturn hit in 2008, and the cost of borrowing
money from banks rose hugely, the country was ill-prepared to cope.
 Debt levels reached the point where the country was no longer able to repay its
loans, and was forced to ask for help from its European partners and the IMF in the
form of massive loans.

7. 4. What do the Greek people think?
 Millions of Greeks were given the chance to have their say on whether to
accept the terms of the latest international bailout.
 A country-wide referendum held on 5 July asked voters if they supported the
austerity demands of its creditors, which included raising taxes and slashing
welfare spending.
 The governing radical-left Syriza party had urged people to vote "No" -
arguing the terms were humiliating - while the "Yes" campaign warned that a
"No" result could see Greece ejected from the eurozone.
 In the end, voters decisively rejected the bailout terms, with 61.3%
voting "No" and 38.7% voting "Yes".

8. 5. What will happen next?
Experts suggest there are at least three scenarios after the
country's "No" vote:
 A failed deal that leads to Greek exit of the eurozone
 A Greek bank collapse leads to Greek exit... or a deal
 EU leaders agree deal and avert bank collapse

11. Greece's economy could shrink by
another 4% this year
 Cash controls hurt
 Austerity hits demand, jobs
 An impossible goal?

12. Economy of Greece
The economy of Greece is the
45th largest in the world with a
nominal gross domestic product
(GDP) of $238 billion per annum.
It is also the 51st largest in the
world by purchasing power parity
at $286 billion per annum.
As of 2013, Greece is the
thirteenth-largest economy in the
28-member European Union.
Greece is ranked 38th and 44th in
the world at $21,653 and $25,859
for nominal GDP per capita and
purchasing power parity per capita
respectively.

14. Causes…
 Government summary report
In January 2010, the Greek Ministry of Finance published the
Program 2010. The report listed these five main causes for
eruption of the current government-debt crisis:
 GDP growth rates
 Government deficit
 Government debt-level
 Budget compliance
 Statistical credibility

15. 2010–2015 government debt crisis