Greece EconomyGreece EconomyCrisis & Crisis & ImpactImpact

VAIBHAV KOLI

Presented By -Presented By -

ContenContentt

• Introduction• Background• Effect• Measures• Impact• Current News• Future• Conclusion

IntroductioIntroductionn

• Place- Southeast of Europe• Capital- Athens• Population- 11,027,508• Human Development Index- 29th Rank• GDP rank- 45th Rank (Nominal)• Total Debt- 323bn Euro• Dept per Citizen- 31,025 Euro (Rs 21,83,386)• Currency Before Euro- Drachma• Main Industries- Tourism & Shipping

Background

How Crisis

Started?

Entry In European Union (EU)Entry In European Union (EU)

• EU formed in 1958 • To remove

regional disparity, improve economy & increase trading

• Greece Joined EU in 1981

Entry in EuropeanEntry in European Economic & Monetary Union (EMU) Economic & Monetary Union (EMU)

• Greece Joined EMU in 2001• Switch Drachma to Euro currency• For stable prize & exchange rate• Also low interest rates

Government PoliciesGovernment Policies

• More Government Jobs• Increase in Employees

Salary• High Tax Evasion• High Corruption • Obsolete Pension System• Increased Access to

Capital at Low Interest Rates

Hosting Olympics (2004)Hosting Olympics (2004)

• Venue – Athens• Cost – Near about €15 billion

Deficit RateDeficit Rate

• High spending by 87% & weak revenue by 31%• Budget Deficit 5% reported

Fraud ReveledFraud Reveled• Misreporting financial data• European Commission issues formal

warning

Rating DeclinedRating Declined• Downgrades Greece's credit rating• From ‘A-’ to ‘BBB+’ (Now CCC-)• The budget deficit was doubled to 9%

EffectEffectss

What went wrong?

Stock MarketStock Market

• Effect of US Sub-Prime Recession • The Stocks & Euro declined

Industrial ProductionIndustrial Production• Manufacturing decreased by 11.3%• Electricity Production dropped by 12.2%

Bank In TroubleBank In Trouble

• Greek bank stock price declined by 47%

• Greek bank deposits have fallen to €8.4 billion

Retail StoresRetail Stores

• 65,000 Retail stores closed• Private sector wages cut by 10-20%,• Govt. sector wages cut by 20-30%.

Impact on European Union (EU)Impact on European Union (EU)

• Crisis reduce confidence of other European economies

• Italy, Spain, Portuguese, Ireland are most at risk with their debts

Measures

What's the way out?

11stst Round of Crisis Response (Feb 2010) Round of Crisis Response (Feb 2010)

• Bailout ContributionBailout Contribution (€110 billion)(€110 billion)1. IMF (International Monetary Fund) = €30 bn2. Euro Zone Creditors = €80 bn • ECB (European Central Bank) purchased €45 billion bonds from Greece govt.

Austerity MeasuresAusterity Measures

• Freeze in salaries of all Govt. employees.• 10% cut in Bonuses & overtime work.• 8% cut in public sector allowances

22nd nd Round of Crisis Response (July 2011)Round of Crisis Response (July 2011)

• Bailout ContributionBailout Contribution (€109 billion)1. EFSF (European Financial Stability Facility) = €109 billion2. ECB liquidity support for Greek banks = €98 billion• Euro zone leaders agree a 50% debt write-off from Greek

Banks

Revised Austerity PlanRevised Austerity Plan• Increases in VAT [10%]• Return of special tax on high pensions• Average retirement age increased from

61 to 65

33ndnd Round of Crisis Response (Feb 2012) Round of Crisis Response (Feb 2012)

• Greek parliament approves a new package= €1€130 30 billionbillion

FurtherFurther Austerity MeasuresAusterity Measures

• Further cut in salaries by 8%• The 13th & 14th salaries paid & pension

installments abolished • 10% rise in luxury taxes and taxes on

alcohol, cigarettes and fuel.

Impact

What happened

Next?

Unemployment IncreasedUnemployment Increased

• Unemployment rate goes to 27.47%• 613 people lost their jobs per day

• 7 out of 10 considering working abroad• Attacks on foreign immigrants to leave

Greece

DeparturesDepartures

Inflation RiseInflation Rise

• Inflation rate moving above 4%• Shortage of food in market

Poverty StrickenPoverty Stricken

• No Job, No Food, No Shelter• People lived on Streets

Riots on streetsRiots on streets

• Thousands of protesters march on parliament

• “We wont pay for your mistakes”

Political ChangePolitical Change• Syriza (Radical Left) Party in Power• Alexis Tsipras led Syriza to victory by Anti-austerity Votes

Current Current AffairsAffairs

• Missed IMF repayment of €1.6 billion on 30th June 2015• All banks closed from last week & restrictions

on ATM for only €60 per day• PM Alexis Tsipras announced the referendum

bailout with austerity or not at last Sunday • 61% voted “NoNo” to austerity (OXI)(OXI)

Future of Future of GreeceGreece

If “Grexit”“Grexit” happens then• Introduce a New Currency A parallel currency could be used for a while • Return to the Drachma Eventually revert to the drachma• Nationalize Greece's Banking System “We will shut down the banks and nationalize

them” • Huge Credit Lockdown EU members credit lockdown in Greece

ConclusioConclusionn

Economic PlanningEconomic Planning is very important for sake of national health & stronger reform is needed to get out of crisis.

ReferenceReferencess

• www.aljazzera.com• www.france24.com• www.bloomberg.com• www.newyorktimes.com• www.wallstreetjournal.com• www.nationaldebtclocks.com• www.statastica.com• www.timesofindia.com

Thank Thank YouYou

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