On the Brink of Default – The
Greek Economy
Tutor2u
September 2011
Beware Greeks bearing debts
•
•
•
•
•
•
•
•
•
•
•
•
A founder member of the Euro in 2001
After years of strong growth - went into recession in 2009
Budget deficit was fraudulently under-reported
Fiscal deficit surged to 15.4% of GDP in 2010
Sharp loss of investor confidence
Caused large rise in borrowing costs (bond yields)
May 2010 Greece became the first euro zone member to receive a
Euro 110bn rescue package from the EU and IMF
Recession has continued
Greece's govt debt is now 150% of GDP and rising
Fiscal austerity has met with fierce political unrest
Recognition that default is inevitable
But with what consequences for Greece and the rest of Europe?
A Crisis of Confidence – Bond Yields
Real GDP Growth
Recession and Unemployment
Soaring unemployment
Decade of improved relative living
standards is lost
An unsustainable level of debt
Fiscal Crisis Prompts Default
Fewer people in work and a weaker
trend growth rate
Manufacturing and Property in a
Slump