Economy of Greece

Economy of Greece

Greek agriculture, shipping and tourism
Currency	1 euro (ευρώ) = 100 cents (λεπτά)[1]
Fiscal year	Calendar year[2]
Trade organisations	EU, WTO, OECD, BIS, BSEC[2]
Statistics
GDP	$194.248 billion (nominal, 2016)[3] $289.398 billion (PPP, 2016)[3]
GDP rank	46 (nominal, 2015)[4] 54 (PPP, 2015)[5]
GDP growth	0.4% (Q1 2017 est., year-on-year)[6][7]
GDP per capita	$17,901 (nominal, 2016)[3] $26,669 (PPP, 2016)[3]
GDP by sector	services: 82.8%; industry: 13.3%; agriculture: 3.9% (2015 est.)
Inflation (CPI)	1.2% (May 2017)[8]
Population below poverty line	35.6% at risk of poverty or social exclusion (2016)[9][10]
Gini coefficient	34.3 (2016)[11][12]
Labour force	4,750,885 (March 2017)[13]
Labour force by occupation	services: 72.4%; industry: 15%; agriculture: 12.6% (2015 est.)
Unemployment	22.5% (March 2017)[13]
Average gross salary	€17,642 (2015; annual)[14]
Average net salary	€9,303 (2013; annual, equivalised)[15]
Median net salary	€7,520 (2015; annual, equivalised)[15]
Main industries	shipping (4th; 2011),[16][17] tourism, food and tobacco processing, textiles, chemicals, metal products; mining, petroleum[2]
Ease-of-doing-business rank	61 (2017)[18]
External
Exports	€25.45 billion (−1.4%; 2016 est.)[19]
Export goods	petroleum oils (not crude), etc 38.88%, aluminium and articles thereof 4.38%; electrical, electronic equipment 3.75%; pharmaceutical products 3.48%; plastics and articles thereof 3.32%; vegetables, fruits, etc 3.18%; iron and steel products 3.03% (2012)[20]
Main export partners	Italy 11.2%  Germany 7.3%  Turkey 6.6%  Cyprus 5.9%  Bulgaria 5.2%  United States 4.8%  United Kingdom 4.2%  Egypt 4% (2015)[2]
Imports	€44.2 billion (1.3%; 2016 est.)[19]
Import goods	crude petroleum oils, etc 37.47%; electrical, electronic equipment 6.48%; pharmaceutical products 5.92%; machinery, etc 4.2%; ships, boats, etc 4.13%; plastics and articles thereof 2.72%; cars, car parts, motorcycles, etc 2.72% (2012)[20]
Main import partners	Germany 10.7%  Italy 8.4%  Russia 7.9%  Iraq 7%  China 5.9%  Netherlands 5.5%  France 4.5% (2015)[2]
FDI stock	$51.35 billion (31 December 2015 est.)[2]
Current account	−$8 billion (2015 est.)[2]
Gross external debt	€436.071 billion (Q2 2016, provisional)[21]
Net international investment position	−€234.542 billion (Q2 2016, provisional)[22]
Public finances
Public debt	€314.897 billion (179.0% of GDP; 2016 est.)[23]
Budget balance	€1.288 billion (0.7% of GDP; 2016 est.)[23]
Revenues	49.7% of GDP (2016 est.)[23]
Expenses	49.0% of GDP (2016 est.)[23]
Credit rating	DBRS:[24] CCC (high) Outlook: Stable Fitch:[25] CCC Moody's:[26] Caa2 Outlook: Positive Standard & Poor's:[27] B- AAA (T&C Assessment) Outlook: Stable
Foreign reserves	$6.026 billion (31 December 2015 est.)[2]

Economy of Greece
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The economy of Greece is the 46th largest in the world with a nominal gross domestic product (GDP) of $194.851 billion per annum.^[4] It is also the 54th largest in the world by purchasing power parity, at $285.447 billion per annum.^[5] As of 2015, Greece is the fifteenth-largest economy in the 28-member European Union.^[28] Greece is ranked 38th and 47th in the world at $17,901 and $26,669 for nominal GDP per capita and purchasing power parity per capita respectively.^[3]

Greece is a developed country with an economy based on the service (82.8%) and industrial sectors (13.3%). The agricultural sector contributed 3.9% of national economic output in 2015.^[2] Important Greek industries include tourism and shipping, with 18 million international tourists in 2013, Greece was the 7th most visited country in the European Union and 16th in the world.^[29] The Greek Merchant Navy is the largest in the world, with Greek-owned vessels accounting for 15% of global deadweight tonnage as of 2013,^[30] the increased demand for international maritime transportation between Greece and Asia has resulted in unprecedented investment in the shipping industry.^[31]

The country is a significant agricultural producer within the EU. Greece has the largest economy in the Balkans and is as an important regional investor.^[32][33] Greece was the largest foreign investor in Albania in 2013,^[34] the third in Bulgaria, in the top-three in Romania and Serbia and the most important trading partner and largest foreign investor in the former Yugoslav Republic of Macedonia.^[35][36][37] The Greek telecommunications company OTE has become a strong investor in former Yugoslavia and in other Balkan countries.^[35]

Greece is classified as an advanced,^[38] high-income economy,^[39] and was a founding member of the Organisation for Economic Co-operation and Development (OECD) and of the Organization of the Black Sea Economic Cooperation (BSEC). The country joined what is now the European Union in 1981;^[1] in 2001 Greece adopted the euro as its currency, replacing the Greek drachma at an exchange rate of 340.75 drachmae per euro.^[1][40] Greece is a member of the International Monetary Fund and of the World Trade Organization, and ranked 34th on Ernst & Young's Globalization Index 2011.^[41]

World War II (1939-1945) devastated the country's economy, but the high levels of economic growth that followed from 1950 to 1980 have been called the Greek economic miracle.^[42] From 2000 Greece saw high levels of GDP growth above the Eurozone average, peaking at 5.8% in 2003 and 5.7% in 2006.^[43] The subsequent Great Recession and Greek government-debt crisis, a central focus of the wider European debt crisis, plunged the economy into a sharp downturn, with real GDP growth rates of −0.3% in 2008, −4.3% in 2009, −5.5% in 2010, −9.1% in 2011, −7.3% in 2012 and −3.2% in 2013.^[44] In 2011, the country's public debt reached €356 billion (172% of nominal GDP),^[45] after negotiating the biggest debt restructuring in history with the private sector, Greece reduced its sovereign debt burden to €280 billion (137% of GDP) in the first quarter of 2012.^[46] Greece achieved a real GDP growth rate of 0.4% in 2014 after 6 years of economic decline,^[44][47] but contracted by 0.3% in 2015 and by 0.025% in 2016.^[6][7][48]

History[edit]

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The evolution of the Greek economy during the 19th century (a period that transformed a large part of the world because of the Industrial Revolution) has been little researched. Recent research from 2006^[49] examines 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 the other Western European nations. Industrial activity, (including heavy industry like shipbuilding) was evident, mainly in Ermoupolis and Piraeus.^[50][51] Nonetheless, Greece faced economic hardships and defaulted on its external loans in 1826, 1843, 1860 and 1893.^[52]

Other studies support the above view on the general trends in the economy, providing comparative measures of standard of living, the per capita income (in purchasing power terms) of Greece was 65% that of France in 1850, 56% in 1890, 62% in 1938,^[53][54] 75% in 1980, 90% in 2007, 96.4% in 2008 and 97.9% in 2009.^[55][56]

The country's post-World War II development has largely been connected with the Greek economic miracle,^[42] during that period, Greece saw growth rates second only to those of Japan, while ranking first in Europe in terms of GDP growth.^[42] It is indicative that between 1960 and 1973 the Greek economy grew by an average of 7.7%, in contrast to 4.7% for the EU15 and 4.9% for the OECD.^[42] Also during that period, exports grew by an average annual rate of 12.6%.^[42]

Strengths and weaknesses[edit]

Greece enjoys a high standard of living and very high Human Development Index, ranking 29th in the world in 2014.^[57] However, the severe recession of recent years has seen GDP per capita fall from 94% of the EU average in 2009 to 68% in 2015.^[58][59] Actual Individual Consumption (AIC) per capita fell from 104% of the EU average to 77% during the same period.^[58][59]

Greece's main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum. Greece's GDP growth has also, as an average, since the early 1990s been higher than the EU average. However, the Greek economy continues to face significant problems, including high unemployment levels, an inefficient public sector bureaucracy, tax evasion, corruption and low global competitiveness.^[60][61]

Greece is ranked 58th in the world on the Corruption Perceptions Index, alongside Romania.^[62] Greece has the EU's lowest Index of Economic Freedom and Global Competitiveness Index, ranking 138th and 86th in the world respectively.^[63][64]

GDP growth rates of the Greek economy between 1961 and 2010

After fourteen consecutive years of economic growth, Greece went into recession in 2008.^[65] By the end of 2009, the Greek economy faced the highest budget deficit and government debt-to-GDP ratios in the EU, after several upward revisions, the 2009 budget deficit is now estimated at 15.7% of GDP.^[66] This, combined with rapidly rising debt levels (127.9% of GDP in 2009) led to a precipitous increase in borrowing costs, effectively shutting Greece out of the global financial markets and resulting in a severe economic crisis.^[67]

Greece was accused of trying to cover up the extent of its massive budget deficit in the wake of the global financial crisis,^[68] the allegation was prompted by the massive revision of the 2009 budget deficit forecast by the new PASOK government elected in October 2009, from "6–8%" (estimated by the previous New Democracy government) to 12.7% (later revised to 15.7%). However, the accuracy of the revised figures has also been questioned, and in February 2012 the Hellenic Parliament voted in favor of an official investigation following accusations by a former member of the Hellenic Statistical Authority that the deficit had been artificially inflated in order to justify harsher austerity measures.^[69][70]

The Greek labor force, which amount around 5 million workers, average 2,032 hours of work per worker annually in 2011, is ranked fourth among OECD countries, after Mexico, South Korea and Chile.^[71] The Groningen Growth & Development Centre has published a poll revealing that between 1995 and 2005, Greece was the country whose workers have the most hours/year work among European nations; Greeks worked an average of 1,900 hours per year, followed by Spaniards (average of 1,800 hours/year).^[72]

As a result of the ongoing economic crisis, industrial production in the country went down by 8% between March 2010 and March 2011,^[73] The volume of building activity saw a reduction of 73% in 2010.^[74] Additionally, the turnover in retail sales saw a decline of 9% between February 2010 and February 2011.^[75]

Between 2008 and 2013 unemployment skyrocketed, from a generational low of 7.2% in the second and third quarters of 2008 to a high of 27.9% in June 2013, leaving over a million jobless.^[76][77][78] Youth unemployment peaked at 64.9% in May 2013.^[79] In 2015, unemployment was rated around 24% and youth unemployment around 47%.

Eurozone entry[edit]

Greece entered the Eurozone in 2001

Greece was accepted into the Economic and Monetary Union of the European Union by the European Council on 19 June 2000, based on a number of criteria (inflation rate, budget deficit, public debt, long-term interest rates, exchange rate) using 1999 as the reference year. After an audit commissioned by the incoming New Democracy government in 2004, Eurostat revealed that the statistics for the budget deficit had been under-reported.^[80]

Most of the differences in the revised budget deficit numbers were due to a temporary change of accounting practices by the new government, i.e., recording expenses when military material was ordered rather than received.^[81] However, it was the retroactive application of ESA95 methodology (applied since 2000) by Eurostat, that finally raised the reference year (1999) budget deficit to 3.38% of GDP, thus exceeding the 3% limit. This led to claims that Greece (similar claims have been made about other European countries like Italy)^[82] had not actually met all five accession criteria, and the common perception that Greece entered the Eurozone through "falsified" deficit numbers.

In the 2005 OECD report for Greece,^[83] it was clearly stated that "the impact of new accounting rules on the fiscal figures for the years 1997 to 1999 ranged from 0.7 to 1 percentage point of GDP; this retroactive change of methodology was responsible for the revised deficit exceeding 3% in 1999, the year of [Greece's] EMU membership qualification". The above led the Greek minister of finance to clarify that the 1999 budget deficit was below the prescribed 3% limit when calculated with the ESA79 methodology in force at the time of Greece's application, and thus the criteria had been met.^[84]

The original accounting practice for military expenses was later restored in line with Eurostat recommendations, theoretically lowering even the ESA95-calculated 1999 Greek budget deficit to below 3% (an official Eurostat calculation is still pending for 1999).

An error sometimes made is the confusion of discussion regarding Greece’s Eurozone entry with the controversy regarding usage of derivatives’ deals with U.S. Banks by Greece and other Eurozone countries to artificially reduce their reported budget deficits. A currency swap arranged with Goldman Sachs allowed Greece to "hide" 2.8 billion Euros of debt, however, this affected deficit values after 2001 (when Greece had already been admitted into the Eurozone) and is not related to Greece’s Eurozone entry.^[85]

A study of the period 1999–2009 by forensic accountants has found that data submitted to Eurostat by Greece, among other countries, had a statistical distribution indicative of manipulation; "Greece with a mean value of 17.74, shows the largest deviation from Benford's law among the members of the eurozone, followed by Belgium with a value of 17.21 and Austria with a value of 15.25".^[86][87]

2010–2015 government debt crisis[edit]

Greek government debt levels from 1999 to present.

By the end of 2009, as a result of a combination of international and local factors the Greek economy faced its most-severe crisis since the restoration of democracy in 1974 as the Greek government revised its deficit from a prediction of 3.7% in early 2009 and 6% in September 2009, to 12.7% of gross domestic product (GDP).^[88][89]

In early 2010, it was revealed that through the assistance of Goldman Sachs, JPMorgan Chase and numerous other banks, financial products were developed which enabled the governments of Greece, Italy and many other European countries to hide their borrowing.^[90][91] Dozens of similar agreements were concluded across Europe whereby banks supplied cash in advance in exchange for future payments by the governments involved; in turn, the liabilities of the involved countries were "kept off the books".^{[91][92][93][94][95][96]}

According to Der Spiegel, credits given to European governments were disguised as "swaps" and consequently did not get registered as debt because Eurostat at the time ignored statistics involving financial derivatives. A German derivatives dealer had commented to Der Spiegel that "The Maastricht rules can be circumvented quite legally through swaps," and "In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank."^[96] These conditions had enabled Greek as well as many other European governments to spend beyond their means, while meeting the deficit targets of the European Union and the monetary union guidelines;^[91][97] in May 2010, the Greek government deficit was again revised and estimated to be 13.6%^[98] which was the second highest in the world relative to GDP with Iceland in first place at 15.7% and Great Britain third with 12.6%.^[99] Public debt was forecast, according to some estimates, to hit 120% of GDP during 2010.^[100]

As a consequence, there was a crisis in international confidence in Greece's ability to repay its sovereign debt, as reflected by the rise of the country's borrowing rates (although their slow rise – the 10-year government bond yield only exceeded 7% in April 2010 – coinciding with a large number of negative articles, has led to arguments about the role of international news media in the evolution of the crisis); in order to avert a default (as high borrowing rates effectively prohibited access to the markets), in May 2010 the other Eurozone countries, and the IMF, agreed to a "rescue package" which involved giving Greece an immediate €45 billion in bail-out loans, with more funds to follow, totaling €110 billion.^[101][102] In order to secure the funding, Greece was required to adopt harsh austerity measures to bring its deficit under control,^[103] their implementation will be monitored and evaluated by the European Commission, the European Central Bank and the IMF.^[104][105]

The financial crisis – particularly the austerity package put forth by the EU and the IMF – has been met with anger by the Greek public, leading to riots and social unrest, while there have been theories about the effect of international media. Despite - others say because of - the long range of austerity measures, the government deficit has not been reduced accordingly, mainly, according to many economists, because of the subsequent recession.^{[106][107][108][109][110]}

Public sector workers have come out on strike in order to resist job cuts and reductions to salaries as the government promises that a large scale privatisation programme will be accelerated.^[111] Immigrants are sometimes treated as scapegoats for economic problems by far-right extremists.^[112]

In 2013, Greece became the first developed market to be reclassified as an emerging market by financial services companies MSCI and S&P Dow Jones Indices.^{[113][114][115]}

By July 2014 there was still anger and protests about the austerity measures, with a 24-hour strike among government workers timed to coincide with an audit by inspectors from the International Monetary Fund, the European Union and European Central Bank in advance of a decision on a second bailout of one billion euros ($1.36 billion), due in late July.^[116]

Greece exited its six-year recession in the second quarter of 2014,^[47][117] but the challenges of securing political stability and debt sustainability remain.^[118]

Primary sector[edit]

Agriculture and fishery[edit]

Vineyard in Naoussa, central Macedonia.

In 2010, Greece was the European Union's largest producer of cotton (183,800 tons) and pistachios (8,000 tons)^[119] and ranked second in the production of rice (229,500 tons)^[119] and olives (147,500 tons),^[120] third in the production of figs (11,000 tons) and^[120] almonds (44,000 tons),^[120] tomatoes (1,400,000 tons)^[120] and watermelons (578,400 tons)^[120] and fourth in the production of tobacco (22,000 tons).^[119] Agriculture contributes 3.8% of the country's GDP^[2] and employs 12.4% of the country's labor force.^[2]

Greece is a major beneficiary of the Common Agricultural Policy of the European Union, as a result of the country's entry to the European Community, much of its agricultural infrastructure has been upgraded and agricultural output increased. Between 2000 and 2007 organic farming in Greece increased by 885%, the highest change percentage in the EU.^[121]

In 2007, Greece accounted for 19% of the EU's fishing haul in the Mediterranean Sea,^[122] ranked third with 85,493 tons,^[122] and ranked first in the number of fishing vessels in the Mediterranean between European Union members.^[122] Additionally, the country ranked 11th in the EU in total quantity of fish caught, with 87,461 tons.^[122]

Secondary sector[edit]

Industry[edit]

The fuselage for the Dassault nEUROn stealth jet is produced in Greece by the Hellenic Aerospace Industry.

Between 2005 and 2011, Greece has had the highest percentage increase in industrial output compared to 2005 levels out of all European Union members, with an increase of 6%.^[123] Eurostat statistics show that the industrial sector was hit by the Greek financial crisis throughout 2009 and 2010,^[124] with domestic output decreasing by 5.8% and industrial production in general by 13.4%.^[124] Currently, Greece is ranked third in the European Union in the production of marble (over 920,000 tons), after Italy and Spain.

Between 1999 and 2008, the volume of retail trade in Greece increased by an average of 4.4% per year (a total increase of 44%),^[124] while it decreased by 11.3% in 2009.^[124] The only sector that did not see negative growth in 2009 was administration and services, with a marginal growth of 2.0%.^[124]

In 2009, Greece's labor productivity was 98% that of the EU average,^[124] but its productivity-per-hour-worked was 74% that the Eurozone average,^[124] the largest industrial employer in the country (in 2007) was the manufacturing industry (407,000 people),^[124] followed by the construction industry (305,000)^[124] and mining (14,000).^[124]

Mining[edit]

Tertiary sector[edit]

Maritime industry[edit]

The Port of Thessaloniki

Neorion shipyard, located in Ermoupolis

23% of the world's total merchant fleet is owned by Greek companies, making it the largest in the world. Greece is ranked in the top for all kinds of ships, including first for tankers and bulk carriers.

Shipping has traditionally been a key sector in the Greek economy since ancient times;^[127] in 1813, the Greek merchant navy was made up of 615 ships.^[128] Its total tonnage was 153,580 tons and was manned with 37,526 crewmembers and 5,878 cannons;^[128] in 1914 the figures stood at 449,430 tons and 1,322 ships (of which 287 were steam boats).^[129]

During the 1960s, the size of the Greek fleet nearly doubled, primarily through the investment undertaken by the shipping magnates Onassis, Vardinoyannis, Livanos and Niarchos.^[130] The basis of the modern Greek maritime industry was formed after World War II when Greek shipping businessmen were able to amass surplus ships sold to them by the United States Government through the Ship Sales Act of the 1940s.^[130]

Greece has the largest merchant navy in the world, accounting for more than 15% of the world's total deadweight tonnage (dwt) according to the United Nations Conference on Trade and Development.^[30] The Greek merchant navy's total dwt of nearly 245 million is comparable only to Japan's, which is ranked second with almost 224 million.^[30] Additionally, Greece represents 39.52% of all of the European Union's dwt.^[131] However, today's fleet roster is smaller than an all-time high of 5,000 ships in the late 1970s.^[127]

Greece is ranked fourth in the world by number of ships (3,695), behind China (5,313), Japan (3,991), and Germany (3,833).^[30] A European Community Shipowners' Associations report for 2011–2012 reveals that the Greek flag is the seventh-most-used internationally for shipping, while it ranks second in the EU.^[131]

In terms of ship categories, Greek companies have 22.6% of the world's tankers^[131] and 16.1% of the world's bulk carriers (in dwt).^[131] An additional equivalent of 27.45% of the world's tanker dwt is on order,^[131] with another 12.7% of bulk carriers also on order.^[131] Shipping accounts for an estimated 6% of Greek GDP,^[132] employs about 160,000 people (4% of the workforce),^[133] and represents 1/3 of the country's trade deficit.^[133] Earnings from shipping amounted to €14.1 billion in 2011,^[131] while between 2000 and 2010 Greek shipping contributed a total of €140 billion^[132] (half of the country's public debt in 2009 and 3.5 times the receipts from the European Union in the period 2000–2013).^[132] The 2011 ECSA report showed that there are approximately 750 Greek shipping companies in operation.^[132]

The latest available data from the Union of Greek Shipowners show that "the Greek-owned ocean-going fleet consists of 3,428 ships, totaling 245 million deadweight tonnes in capacity, this equals 15.6 percent of the carrying capacity of the entire global fleet, including 23.6 percent of the world tanker fleet and 17.2 percent of dry bulk".^[134]

Counting shipping as quasi-exports and in terms of monetary value, Greece ranked 4th globally in 2011 having exported shipping services worth 17,704.132 million $; only Denmark, Germany and South Korea ranked higher during that year.^[16] Similarly counting shipping services provided to Greece by other countries as quasi-imports and the difference between exports and imports as a trade balance, Greece in 2011 ranked in the latter second behind Germany, having imported shipping services worth 7,076.605 million US$ and having run a trade surplus of 10,712.342 million US$.^[135][136]

Telecommunications[edit]

OTE headquarters in Athens

Between 1949 and the 1980s, telephone communications in Greece were a state monopoly by the Hellenic Telecommunications Organization, better known by its acronym, OTE. Despite the liberalization of telephone communications in the country in the 1980s, OTE still dominates the Greek market in its field and has emerged as one of the largest telecommunications companies in Southeast Europe,^[138] since 2011, the company's major shareholder is Deutsche Telekom with a 40% stake, while the Greek state continues to own 10% of the company's shares.^[138] OTE owns several subsidiaries across the Balkans, including Cosmote, Greece's top mobile telecommunications provider, Cosmote Romania and Albanian Mobile Communications.^[138]

Other mobile telecommunications companies active in Greece are Wind Hellas and Vodafone Greece, the total number of active cellular phone accounts in the country in 2009 based on statistics from the country's mobile phone providers was over 20 million,^[139] a penetration of 180%.^[139] Additionally, there are 5.745 million active landlines in the country.^[2]

Greece has tended to lag behind its European Union partners in terms of Internet use, with the gap closing rapidly in recent years, the percentage of households with access to the Internet more than doubled between 2006 and 2013, from 23% to 56% respectively (compared with an EU average of 49% and 79%).^[140][141] At the same time, there has been a massive increase in the proportion of households with a broadband connection, from 4% in 2006 to 55% in 2013 (compared with an EU average of 30% and 76%).^[140][141] However, Greece also has the EU's third highest percentage of people who have never used the Internet: 36% in 2013, down from 65% in 2006 (compared with an EU average of 21% and 42%).^[140][141]

Tourism[edit]

The island of Santorini.

The Temple of Poseidon in Sounion, popular tourist destination.

Tourism in the modern sense has only started to flourish in Greece in the years post-1950,^[142][143] although tourism in ancient times is also documented in relation to religious or sports festivals such as the Olympic Games.^[143] Since the 1950s, the tourism sector saw an unprecedented boost as arrivals went from 33,000 in 1950 to 11.4 million in 1994.^[142]

Greece attracts more than 16 million tourists each year, thus contributing 18.2% to the nation's GDP in 2008 according to an OECD report.^[144] The same survey showed that the average tourist expenditure while in Greece was $1,073, ranking Greece 10th in the world,^[144] the number of jobs directly or indirectly related to the tourism sector were 840,000 in 2008 and represented 19% of the country's total labor force.^[144] In 2009, Greece welcomed over 19.3 million tourists,^[145] a major increase from the 17.7 million tourists the country welcomed in 2008.^[146]

Among the member states of the European Union, Greece was the most popular destination for residents of Cyprus and Sweden in 2011.^[147]

The ministry responsible for tourism is the Ministry of Culture and Tourism, while Greece also owns the Greek National Tourism Organization which aims in promoting tourism in Greece.^[144]

In recent years a number of well-known tourism-related organizations have placed Greek destinations in the top of their lists; in 2009 Lonely Planet ranked Thessaloniki, the country's second-largest city, the world's fifth best "Ultimate Party Town", alongside cities such as Montreal and Dubai,^[148] while in 2011 the island of Santorini was voted as the best island in the world by Travel + Leisure.^[149] The neighbouring island of Mykonos was ranked as the 5th best island Europe.^[149] Thessaloniki was the European Youth Capital in 2014.

Trade and investment[edit]

Foreign investment[edit]

Since the fall of communism, Greece has invested heavily in neighbouring Balkan countries. Between 1997 and 2009, 12.11% of foreign direct investment capital in the Republic of Macedonia was Greek, ranking fourth. In 2009 alone, Greeks invested €380 million in the country,^[150] with companies such as Hellenic Petroleum having made important strategic investments.^[150]

Greece invested €1.38 billion in Bulgaria between 2005 and 2007^[151] and many important companies (including Bulgarian Postbank, United Bulgarian Bank Coca-Cola Bulgaria) are owned by Greek financial groups.^[151] In Serbia, 250 Greek companies are active with a total investment of over €2 billion.^[152] Romanian statistics from 2005 show that Greek investment in the country exceeded €3 billion.^[153] Greece has been the largest investor in Albania since the fall of communism with 25% of foreign investments in 2016 coming from Greece, in addition business relations between both are extremely strong and continuously rising.^[154]

Trade[edit]

Graphical depiction of Greece's product exports in 2012 in 28 color-coded categories

Since the start of the debt crisis, Greece’s negative balance of trade has decreased significantly from €44.3 billion in 2008 to €18.75 billion in 2016.^[19][155] Imports increased by 1.3% in 2016, while exports fell by 1.4%.^[19]

Imports and exports in 2008; values in millions^[155]

Rank	Imports		Rank	Exports
	Origin	Value		Destination	Value
1	Germany	€7,238.2	1	Denmark	€2,001.9
2	Italy	€6,918.5	2	Italy	€1,821.3
3	Russia	€4,454.0	3	France	€1,237.0
4	China	€3,347.1	4	Netherlands	€1,103.0
5	France	€3,098.0	5	Russia	€885.4
–	European Union	€33,330.5	–	European Union	€11,102.0
–	Total	€60,669.9	–	Total	€17,334.1

Imports and exports in 2011; values in millions^[156]

Rank	Imports		Rank	Exports
	–	European Union		€22,688.5	–	European Union	€11,377.7
–	Total	€42,045.4	–	Total	€22,451.1

Greece is also the largest trade partner of Cyprus (exports 23.0%, imports 21.6%)^[157] and the largest import partner of the Republic of Macedonia (19.0%).^[158]

Imports and exports in 2012^[20]

	Imports				Exports
Rank	Origin	Value (€ mil)	Value (% of total)	Rank	Destination	Value (€ mil)	Value (% of total)
0	a	0		-1	0	a	0	-1
1	Russia	5,967.20132	12.6	1	Turkey	2,940.25203	10.8
2	Germany	4,381.92656	9.2	2	Italy	2,033.77413	7.5
3	Italy	3,668.88622	7.7	3	Germany	1,687.03947	6.2
4	Saudi Arabia	2,674.00587	5.6	4	Bulgaria	1,493.75355	5.5
5	People's Republic of China	2,278.03883	4.8	5	Cyprus	1,319.28598	4.8
6	Netherlands	2,198.57126	4.6	6	United States	1,024.73686	3.8
7	France	1,978.48460	4.2	7	United Kingdom	822.74077	3
#α	OECD	23,849.94650	50.2	#α	OECD	13,276.48107	48.8
#β	G7	11,933.75417	25.1	#β	G7	6,380.86705	23.4
#γ	BRICS	8,682.10265	18.3	#ε	BRICS	1,014.17146	3.7
#δ	BRIC	8,636.02946	18.2	#ζ	BRIC	977.76016	3.6
#ε	OPEC	8,090.76972	17	#γ	OPEC	2,158.60420	7.9
#ζ	NAFTA	751.80608	1.6	#δ	NAFTA	1,215.70257	4.5
#a	European Union 27	21,164.89314	44.5	#a	European Union 27	11,512.31990	42.3
#b	European Union 15	17,794.19344	37.4	#b	European Union 15	7,234.83595	26.6
#3	Africa	2,787.39502	5.9	#3	Africa	1,999.46534	7.3
#4	America	1,451.15136	3.1	#4	America	1,384.04068	5.1
#2	Asia	14,378.02705	30.2	#2	Asia	6,933.51200	25.5
#1	Europe	28,708.38148	60.4	#1	Europe	14,797.20641	54.4
#5	Oceania	71.70603	0.2	#5	Oceania	169.24085	0.6
#	World	47,537.63847	100	#	World	27,211.06362	100
24	z	1000000000000000000	101	24	z	1000000000000000000	101
the International Organisations or Country Groups list and ranking presented above (i.e. #greek_letters and/or #latin_letters), is not indicative of the whole picture of Greece's trade; this is instead only an incomplete selection of some major and well known such Organisations and Groups; rounding errors possibly present

Transport[edit]

Corinth Canal

The Egnatia Odos, part of European route E90.

As of 2012, Greece had a total of 82 airports,^[2] of which 67 were paved and six had runways longer than 3,047 meters.^[2] Of these airports, two are classified as "international" by the Hellenic Civil Aviation Authority,^[159] but 15 offer international services.^[159] Additionally Greece has 9 heliports.^[2] Greece does not have a flag carrier, but the country’s airline industry is dominated by Aegean Airlines and its subsidiary Olympic Air.

Between 1975 and 2009, Olympic Airways (known after 2003 as Olympic Airlines) was the country’s state-owned flag carrier, but financial problems led to its privatization and relaunch as Olympic Air in 2009. Both Aegean Airlines and Olympic Air have won awards for their services; in 2009 and 2011, Aegean Airlines was awarded the "Best regional airline in Europe" award by Skytrax,^[160] and also has two gold and one silver awards by the ERA,^[160] while Olympic Air holds one silver ERA award for "Airline of the Year"^[161] as well as a "Condé Nast Traveller 2011 Readers Choice Awards: Top Domestic Airline" award.^[162]

The Greek road network is made up of 116,986 km of roads,^[2] of which 1863 km are highways, ranking 24th worldwide, as of 2016.^[2] Since the entry of Greece to the European Community (now the European Union), a number of important projects (such as the Egnatia Odos and the Attiki Odos) have been co-funded by the organization, helping to upgrade the country's road network. In 2007, Greece ranked 8th in the European Union in goods transported by road at almost 500 million tons.

Greece's rail network is estimated to be at 2,548 km.^[2] Rail transport in Greece is operated by TrainOSE, a subsidiary of the Hellenic Railways Organization (OSE). Most of the country's network is standard gauge (1,565 km),^[2] while the country also has 983 km of narrow gauge.^[2] A total of 764 km of rail are electrified.^[2] Greece has rail connections with Bulgaria, the Republic of Macedonia and Turkey. A total of three suburban railway systems (Proastiakos) are in operation (in Athens, Thessaloniki and Patras), while one metro system, the Athens Metro, is operational in Athens with another, the Thessaloniki Metro, under construction.

According to Eurostat, Greece's largest port by tons of goods transported in 2010 is the port of Aghioi Theodoroi, with 17.38 million tons.^[163] The Port of Thessaloniki comes second with 15.8 million tons,^[163] followed by the Port of Piraeus, with 13.2 million tons,^[163] and the port of Eleusis, with 12.37 million tons.^[163] The total number of goods transported through Greece in 2010 amounted to 124.38 million tons,^[163] a considerable drop from the 164.3 million tons transported through the country in 2007.^[163] Since then, Piraeus has grown to become the Mediterranean's third-largest port thanks to heavy investment by Chinese logistics giant COSCO; in 2013, Piraeus was declared the fastest-growing port in the world.^[164]

In 2010 Piraeus handled 513,319 TEUs,^[165] followed by Thessaloniki, which handled 273,282 TEUs;^[166] in the same year, 83.9 million people passed through Greece's ports,^[167] 12.7 million through the port of Paloukia in Salamis,^[167] another 12.7 through the port of Perama,^[167] 9.5 million through Piraeus^[167] and 2.7 million through Igoumenitsa.^[167] In 2013, Piraeus handled a record 3.16 million TEUs, the third-largest figure in the Mediterranean, of which 2.52 million were transported through Pier II, owned by COSCO and 644,000 were transported through Pier I, owned by the Greek state.

Energy[edit]

Solar-power generation potential in Greece

View of a wind farm, Panachaiko mountain.

An oil rig near Kavala

A distillation facility owned by Hellenic Petroleum

Energy production in Greece is dominated by the Public Power Corporation (known mostly by its acronym ΔΕΗ, or in English DEI); in 2009 DEI supplied for 85.6% of all energy demand in Greece,^[168] while the number fell to 77.3% in 2010.^[168] Almost half (48%) of DEI's power output is generated using lignite, a drop from the 51.6% in 2009.^[168] Another 12% comes from Hydroelectric power plants^[169] and another 20% from natural gas.^[169] Between 2009 and 2010, independent companies' energy production increased by 56%,^[168] from 2,709 Gigawatt hour in 2009 to 4,232 GWh in 2010.^[168]

In 2008 renewable energy accounted for 8% of the country's total energy consumption,^[170] a rise from the 7.2% it accounted for in 2006,^[170] but still below the EU average of 10% in 2008.^[170] 10% of the country's renewable energy comes from solar power,^[121] while most comes from biomass and waste recycling.^[121] In line with the European Commission's Directive on Renewable Energy, Greece aims to get 18% of its energy from renewable sources by 2020;^[171] in 2013 and for several months, Greece produced more than 20% of its electricity from renewable energy sources and hydroelectric power plants.^[172] Greece currently does not have any nuclear power plants in operation, however in 2009 the Academy of Athens suggested that research in the possibility of Greek nuclear power plants begin.^[173]

Greece had 10 million barrels of proven oil reserves as of 1 January 2012.^[2] Hellenic Petroleum is the country's largest oil company, followed by Motor Oil Hellas. Greece's oil production stands at 1,751 barrels per day (bbl/d), ranked 95th worldwide,^[2] while it exports 19,960 bbl/d, ranked 53rd,^[2] and imports 355,600 bbl/d, ranked 25th.^[2]

In 2011 the Greek government approved the start of oil exploration and drilling in three locations within Greece,^[174] with an estimated output of 250 to 300 million barrels over the next 15 to 20 years,^[174] the estimated output in euros of the three deposits is €25 billion over a 15-year period,^[174] of which €13–€14 billion will enter state coffers.^[174] Greece's dispute with Turkey over the Aegean poses substantial obstacles to oil exploration in the Aegean Sea.

In addition to the above, Greece is also to start oil and gas exploration in other locations in the Ionian Sea, as well as the Libyan Sea, within the Greek exclusive economic zone, south of Crete.^[175][176] The Ministry of the Environment, Energy and Climate Change announced that there was interest from various countries (including Norway and the United States) in exploration,^[176] and the first results regarding the amount of oil and gas in these locations were expected in the summer of 2012.^[176] In November 2012, a report published by Deutsche Bank estimated the value of natural gas reserves south of Crete at €427 billion.^[177]

A number of oil and gas pipelines are currently under construction or under planning in the country, such projects include the Interconnector Turkey-Greece-Italy (ITGI) and South Stream gas pipelines.^[169]

Taxation and tax evasion[edit]

Revenues of Greece between 1999 and 2010 as a percentage of GDP, compared to the EU average.

Greece has a tiered tax system based on progressive taxation. Greek law recognizes six categories of taxable income:^[178] immovable property, movable property (investment), income from agriculture, business, employment, and income from professional activities. Greece's personal income tax rate, until recently, ranged from 0% for annual incomes below €12,000^[178] to 45% for annual incomes over €100,000.^[178] Under the new 2010 tax reform, tax exemptions have been abolished.^[178]

Also under the new austerity measures and among other changes, the personal income tax-free ceiling has been reduced to €5,000 per annum^[179] while further future changes, for example abolition of this ceiling, are already being planned.^[180]

Greece's corporate tax dropped from 40% in 2000^[178] to 20% in 2010,^[178] for 2011 only, corporate tax will be at 24%.^[178] Value added tax (VAT) has gone up in 2010 compared to 2009: 23% as opposed to 19%.^[178]

The lowest VAT possible is 6.5% (previously 4.5%)^[178] for newspapers, periodicals and cultural event tickets, while a tax rate of 13% (from 9%)^[178] applies to certain service sector professions. Additionally, both employers and employees have to pay social contribution taxes, which apply at a rate of 16%^[178] for white collar jobs and 19.5%^[178] for blue collar jobs, and are used for social insurance.

The Ministry of Finance expected tax revenues for 2012 to be €52.7 billion (€23.6 billion in direct taxes and €29.1 billion in indirect taxes),^[181] an increase of 5.8% from 2011.^[181] In 2012, the government was expected to have considerably higher tax revenues than in 2011 on a number of sectors, primarily housing (an increase of 217.5% from 2011).^[181]

Tax evasion[edit]

Greece suffers from very high levels of tax evasion; in the last quarter of 2005, tax evasion reached 49%,^[182] while in January 2006 it fell to 41.6%.^[182] A study by researchers from the University of Chicago concluded that tax evasion in 2009 by self-employed professionals alone in Greece (accountants, dentists, lawyers, doctors, personal tutors and independent financial advisers) was €28 billion or 31% of the budget deficit that year.^[183]

The Tax Justice Network has said that there are over €20 billion in Swiss bank accounts held by Greeks,^[184] the former Finance Minister of Greece, Evangelos Venizelos, was quoted as saying, "Around 15,000 individuals and companies owe the taxman 37 billion euros".^[185] Additionally, the TJN puts the number of Greek-owned off-shore companies to over 10,000.^[186]

Following similar actions by the United Kingdom and Germany, the Greek government is in talks with Switzerland in order to tax bank accounts in Switzerland owned by Greek citizens.^[187] The Ministry of Finance has revealed that Greek Swiss bank account holders will either have to pay a tax or reveal information such as the identity of the bank account holder to the Greek internal revenue services,^[187] the Greek and Swiss governments were to reach a deal on the matter by the end of 2011.^[187]

Wealth and standards of living[edit]

National and regional GDP[edit]

GDP per capita of the regions of Greece in 2008.

The country's two largest metropolitan areas account for almost 62% of the national economy.

Greece's most economically important regions are Attica, which contributed €85.579 billion to the economy in 2014, and Central Macedonia, which contributed €23.859 billion.^[188] The smallest regional economies were those of the North Aegean (€2.545 billion) and Ionian Islands (€3.137 billion).^[188]

In terms of GDP per capita, Attica (€22,200) far outranks any other Greek region,^[188] the poorest regions in 2014 were Eastern Macedonia and Thrace (€11,200) and Epirus (€11,400).^[188] At the national level, GDP per capita in 2014 was €16,200.^[188]

Welfare state[edit]

Greece is a welfare state which provides a number of social services such as quasi-universal health care and pensions. In the 2012 budget, expenses for the welfare state (excluding education) stand at an estimated €22.487 billion^[181] (€6.577 billion for pensions^[181] and €15.910 billion for social security and health care expenses),^[181] or 31.9% of the all state expenses.^[181]

Largest companies by revenue 2016[edit]

According to the 2016 Forbes Global 2000 index, Greece's largest publicly traded companies are:

Labour force[edit]

Working hours[edit]

In 2012, the average Greek worker worked for 2034 hours annually; this figure was the third highest among the OECD countries.^[190]

Currency[edit]

Between 1832 and 2002 the currency of Greece was the drachma, after signing the Maastricht Treaty, Greece applied to join the eurozone. The two main convergence criteria were a maximum budget deficit of 3% of GDP and a declining public debt if it stood above 60% of GDP. Greece met the criteria as shown in its 1999 annual public account, on 1 January 2001, Greece joined the eurozone, with the adoption of the euro at the fixed exchange rate ₯340.75 to €1. However, in 2001 the euro only existed electronically, so the physical exchange from drachma to euro only took place on 1 January 2002, this was followed by a ten-year period for eligible exchange of drachma to euro, which ended on 1 March 2012.^[191]

Prior to the adoption of the euro, 64% of Greek citizens viewed the new currency positively,^[192] but in February 2005 this figure fell to 26% and by June 2005 it fell further to 20%,^[192] since 2010 the figure has risen again, and a survey in September 2011 showed that 63% of Greek citizens viewed of the euro positively.^[192]

Charts gallery[edit]

• 

  Greek social expenditures as a percentage of GDP (1998–2009)

• 

  Distribution of income in Greece over the years

• 

  Distribution of total income in Greece over the years

• 

  Employment and unemployment in Greece since 2004

• 

  Greek GDP, Debt (various) and Budget Deficit over the years

• 

  Domestic bank deposits of Greek households by type of account

• 

  Domestic lending by domestic banks in Greece since 1980

• 

  House Price Index, Greece (including flats)

Unemployment rate[edit]

IMF's forecast said that Greece's unemployment rate would hit the highest 14.8 percent in 2012 and decrease to 14.1 in 2014. ^[193] But in fact, the Greek economy suffered a prolonged high unemployment,^[194] the unemployment figure was between 9 per cent and 11 per cent in 2009, and it soared to 28 per cent in 2013. In 2015, Greece's jobless rate is around 24 per cent, it is thought that Greece's potential output has been eroded by this prolonged massive unemployment due to the associated hysteresis effects.^[194]

Poverty[edit]

Greece has been hit hard with recession and the austerity measures that have been put in place and poverty has increased. Those living in extreme poverty rose to 15% in 2015, up from 8.9% in 2011, and a huge increase from 2009 when it wasn’t more than 2.2%.^[195] Those people at risk for poverty or social exclusion was one in three or 35.7%.^[196] The rate among children 0-17 is 17.6% and for young people 18-29 the rate is 24.4%.^[195] With unemployment on the rise, those without jobs are at the highest risk at 70-75%, up from less than 50% in 2011,^[195] with jobs harder and harder to come by, a quarter of the population is out of work, and for people under 25 the rate is 50%. In some harder hit areas of western Greece, the younger generation unemployment rate is more than 60%. When people are out of work for more than two years, they lose their health insurance, further increasing the problems of those in poverty. When younger people are out of work, they rely on the older generations of their families to provide for them to get them through the hard times. However, long term unemployment across the country causes pension funds to decrease because they are getting less money from the working population, so those older generations are getting less money to provide for the younger generations and their entire families, putting more of them in poverty. Many aspects of the economic problems add to the problem, the Greek people have continued job loss and wage cuts, as well as deep cuts in workers compensation and social welfare benefits. For those who are working, their wages have dropped, from 2008 to 2013, Greeks have become 40% poorer on average, and in 2014 saw their disposable household income drop below 2003 levels.^[197] The Economic Survey of Greece 2016 shows optimism in a stronger recovery in 2017 by using things like the reforms in place and outside investment in jobs to help change the course of the high levels of poverty.

References[edit]

Further reading[edit]

• Pasiouras, Fotios. Greek Banking: From the Pre-Euro Reforms to the Financial Crisis and Beyond (Palgrave Macmillan; 2012) 217 pages; covers the mid-1990s to 2011.
• Manolopoulos, J. Greece's 'Odious' Debt: The Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community. London, May 2011: Anthem Press. 

External links[edit]

Wikimedia Commons has media related to Economy of Greece.

• Nick Malkoutzis Greece – A Year in Crisis – Friedrich-Ebert-Stiftung, June 2011
• The Greek Economy: Which Way Forward?, from the Center for Economic and Policy Research, January 2015
• The Greek Economy – a bi-monthly publication by the Hellenic Statistical Authority on the state of the economy
• The Greek Exports – Database of Greek Exporters
• Greek Banks Digest – (in English)
• World Bank Summary Trade Statistics Greece
• Tariffs applied by Greece as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements
• New study on the "Economic, Social and Territorial Situation of Greece" – European Parliament, Committee on Regional Development's delegation to Greece, 13 – 15 July 2011
• OECD Data > Greece
• Greece - Financial Markets