Stierle, S. (2014) “Despite optimistic economic assessments, Greek living standards are still a long way from emerging from the crisis“, LSE EUROPP, 04 July.
Greece was the epicentre of the Eurozone crisis, however the Bank of Greece recently announced that it expects the country to return to growth before the end of this year. Steffen Stierle writes on whether the crisis is now being overcome within Greece. He argues that based on the austerity policies which have been implemented in the country, Greek living standards are still a long way from emerging from the crisis.
The Troika (EU Commission, ECB, IMF) was once again in Athens in April to review the progress of reforms and economic development in Greece. The EU Commission brought seemingly good news back to Brussels. After all, the Review says: “Both soft indicators and hard data point to a bottoming out of the protracted economic recession.” The evidence given is the fact that the Greek economy shrank by only 2.3 per cent in the first quarter of 2014, whereas the decline in the first quarter of 2013 was still as high as 6 per cent.
Positive growth of 0.6 per cent is even expected for 2014 as a whole. But beware: the Troika had already forecast a return to positive growth figures for 2012. Reality produced a decline of 6.4 per cent. The Greek economy was supposed to grow by 2 per cent in 2013. Instead, it shrank by a further 3.9 per cent. And even if things do turn out differently this time, growth of 0.6 per cent is no more than a drop in the ocean, given that the economy has shrunk by almost 25 per cent since 2008.
Relevant posts:
- Olivares-Caminal, R., Κόκκορης, Ι. & Παπαδάκης, Κ. (2014) “H πιθανή έκπληξη της ‘Αναπτυξιακής Λιτότητας’ και ο γρίφος του δυσβάσταχτου χρέους“, Greek Public Policy Forum, 17 Ιανουαρίου.
- Nicos, C. (2013) “From Grexit to Growth: On Fiscal Multipliers and How to End Recession in Greece“, National Institute Economic Review, No. 224, pp.66-76.
- Βαρουφάκης, Ι. (2013) “Η βιογραφία του Grexit“, Protagon.gr, 01 Φεβρουαρίου.