Over the past 13 years, Greece faced a staggering debt crisis and financial stagnation. This forced Greece to sign up for three international bailout programs, the last of which ended in 2018.
The Greek national economy grew by 2.2% in the first three quarters of 2019. Unemployment fell to 16.6% in late 2019 though it still remained the highest in the EU. In 2020, Greek Prime Minister Kyriakos Mitsotakis initiated a gradual and promising recovery due to a series of reforms, tax cuts and investment promises. These measures eventually led to growth.
Despite the pandemic and its consequent series of lockdowns that had partly interrupted the process of economic growth by affecting fundamental sectors such as tourism and the naval industry, the Greek economy is now growing steadily. A report by the European Commission forecasted an increase of 6% in the national GDP by the end of 2023. The report proposed a plan to bolster the economy, making 2023 a year for Greek economic recovery.
The transcript has been edited for clarity.
Alissa Claire Collavo: After more than ten years of crisis, the Greek economy is showing signs of growth. In September 2019, the newly-elected Mitsotakis announced a series of fast-track reforms which the parliament later approved. These aimed at spurring investments and accelerating growth by the end of 2023. What has Greece learned from the economic crisis?
Dimitris Katsikas: The new government has undertaken new measures to increase growth in Greece because their big bet was to make the debt more sustainable. They also wanted the EU to reduce Greece’s fiscal targets.
To achieve these two goals, the government proposed reforms. One of them was to reduce taxation rates and to improve tax collection. Tax reforms were the main issue during the crisis.
Furthermore, the introduction of the new pension law led to an increase in household disposable income. The government also encouraged investments that had suffered during the crisis.
Collavo: The so-called “hot money” has done well investing in Greece. Traders looking for short-term returns have profited. Will long term investment follow?
Katsikas: After such a huge economic and financial crisis, Greece had little money left. Therefore, it welcomed foreign investment of all sorts.
The pandemic caused a setback to the economy. Lockdowns affected foreign exchange earners such as tourism and the shipping industry. Things have changed in 2022 and are looking to improve further in 2023.
Collavo: What are the main sectors for investments aside from tourism in Greece?
Katsikas: The main sectors remain tourism, real estate and resorts. During 2019, there was an increase in bread and breakfast investments. The mortgage system had collapsed and people started renovating their apartments. This was especially the case in the most touristic areas where owners were allowed to shorten leases, creating an inflow of investments.
Greece is also trying to attract more investments in the urban project around the Ellinikon International Airport. New sectors like IT, research and logistics are attracting investment. So is infrastructure such as the expansion of the ports of Piraeus and Alexandroupolis. These ports have successfully attracted investors from China and Saudi Arabia. Companies from France, Russia and Korea have also come flocking.
Investment in the energy sector has already brought good results too.
Collavo: What is the growth forecast? How will this concretely reflect in the daily life of Greek citizens?
Katsikas: The Greek economy registered its first positive growth right before the pandemic. Unemployment fell to 16.6.% in 2019 from 18.5% in 2018. In 2023, things are improving but wages in part-time/temporary jobs continue to be low. Unemployment continues to remain high and, as a result, wage growth is low.
In 2022, about 4.03 million people were employed in Greece, compared to 3.93 million in 2021 and 3.88 million in 2020. The economy of Greece is finally improving.
[Sukhjeet Kaur edited this piece.]
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