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“Greek economy surges after decade of pain,” says Reuters

in a lenthy post, the Reuters global news agency refers to the upward trajectory of the Greek economy following the decade of crisis.

“ A decade ago, Greece was in the throes of a devastating debt crisis marked by years of austerity, hardship and unrest. Now, officials and investors say 2024 could be the year its rebound is finally complete”, says Reuters.

The Greek economy is forecast to grow nearly 3% this year, approaching its pre-crisis size of 2009 and far outpacing the euro zone average of 0.8%.

Borrowing costs have plummeted to below those of Italy, and banks bailed out during the crisis are set to be fully privatised for the first time in decades – a move some of the country’s largest investors see as a final sign of normality.

“With (the state’s participation) out of the way, that’s a landmark,” said Wim-Hein Pals of asset manager Robeco, which recently bought shares in Greek banks.

“The Greek economy is in good shape to benefit from further growth going forward.” The turnaround in Greece, whose debt crisis threatened to cause the demise of the whole euro zone, is stark – on paper at least. Now the country faces a novel problem: being held back by stagnation in the same euro zone giants that once imposed strict reforms on its economy.

After years shut off from international markets, Greece returned to investment grade credit rating in 2023. When the state’s bailout fund last month sold its stake in Piraeus Bank , one of the country’s largest, the sale was oversubscribed eight times.

Challenges remain, however. Falling birthrates and labour shortages threaten the long-term outlook, and the spread of climate-related disasters like wildfires and floods have strained government finances.

Many ordinary Greeks reeling from the crisis say they see little difference as economists say the wider benefits of the rebound will take time. To ensure long-term growth, the country needs to diversify beyond the typical economic drivers of tourism, real estate and services.

More than half of foreign direct investment into Greece, which totalled about 7.5 billion euros ( $ 7.98 billion) in 2022, comes from northern European countries like France and Germany that are struggling with weak growth. Greek exports, such as agricultural goods, fuel and pharmaceutical products – two thirds of which head to the EU – fell almost 9% last year. Economic growth slowed to 2% in 2023, partly a result of its lagging neighbours.

“The lower expectations for growth in Europe affect Greece in two main ways. Through pressure on exports… and through the higher cost of money,” said Nikos Vettas, head of economic think tank IOBE.

Finances revive
Decades of rampant tax evasion and overspending caught up with Greece in 2009, when it went into recession and the government revealed a giant hole in its finances that sent shockwaves across global markets.

By 2015, it had signed three bailouts with the euro zone and the International Monetary Fund worth 280 billion euros. In return it agreed to austerity measures that slashed public sector wages and pensions, and triggered years of violent protests.
Since Greece emerged from the bailout in 2018 it has revived its banking system and has relied solely on debt markets for its borrowing needs. In 2022, it paid off the IMF two years ahead of schedule.

Calm is largely restored. In Athens’ central Syntagma Square, where 10 years ago protesters would hurl petrol bombs at riot police in protest at austerity measures, today buskers entertain tourists who sit in the shade of its sour orange trees.

Visits to the Acropolis, Greece’s best known ancient site, hit 3.8 million in 2023, nearly four times the number seen at the height of the crisis.
For many Greeks though, economic recovery has not translated into improved living standards. Unemployment remains above 10%, the second highest in the EU after Spain, and GDP per capita in purchasing power is among the lowest in the bloc, Eurostat data show. The average monthly salary of 1,175 euros is 20% lower than 15 years ago, according to labour ministry figures.

Greece needs to develop sectors where investments are more long term, said Vettas from IOBE, “like infrastructure projects and manufacturing.”

Unions held a general strike on Wednesday in which trains, buses, ships and taxis were halted and hundreds took to the streets calling for higher wages. Some people haven’t recovered from losing everything when the economy tanked.

Periklis Fryganas took out a bank loan in 2009 to expand his motorcycle repair shop in Athens, only for the crisis to reduce his turnover by 90% over the next six years. He closed the shop in 2020 and recently lost an apartment he shared with his unemployed wife and three sons after using it as collateral for the loan.

“The crisis broke a lot of people and I was one of them,” Fryganas, 61, said. “Things are getting better only for the ‘rich ones’, all the others are lοsing.” ( $ 1 = 0.9404 euros)

PS Local and EU institutions as well as the International Monetary Fund forecast economic growth of 2.1% but whatever….

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8 comments

  1. Inflation is the new austerity, but the economy is booming, so why complain?

  2. So when Wim-Hein Pals of asset manager Robeco, which recently bought shares in Greek banks says “The Greek economy is in good shape to benefit from further growth going forward.” what does it mean?

    The media continues to confuse the measure of something with its reality. The growth in GDP is a growth in market activity that do not necessarily represent ‘success’. Individuals within that country might not be getting richer. They may be getting poorer on average, even while GDP goes up (which they are in Greece). The figure for GDP per capita (or head of population) which can also distort reality like any statistic, tells a different story. Greece is 2nd to Bulgaria in being the poorest in Europe. The gains in GDP are not going to the majority of the population. So where are they going?

    If you’re a money man, like Wim-Hein Pals of asset manager Robeco or a vulture fund purchasing distressed loans, “Greece is an El Dorado”

    “Today there are 1.2 million homes being repossessed, in a land of ten million. Let’s say a house was bought for $250,000 before the crisis. Now it’s worth €200,000. It had a loan on it of €150,000, of which €50,000 was repaid. The mortgagee can’t repay the other €100,000 because of the crisis, loss of income, etc. Then a vulture fund registered in Delaware, with a bank account in the Cayman Islands, buys up the loan for €5,000. Even if they sell it for only €100,000, they’ve gained €95,000 on €5,000. I doubt there’s anywhere you can get higher rates of return. This is happening on an industrial scale.” (to quote somebody cursed by the Greek media)

    The Greek economy is surging for money men, or a vulture fund purchasing distressed loans. There is no growth in ‘things’ that can increase the future wealth of its citizens. If it were, the country would not be exporting its young.

    For those working in Greece, (GDP= national Income) “economic growth”, taking into account prices increases, looks like this chart at https://postimg.cc/N5Bbpvgc

    • ^this – exactly as you said it

    • The figures in the article completely support your argument, Cheshire Cat. GDP has recovered so that it is “approaching its pre-crisis size of 2009”. “The average monthly salary of 1,175 euros is 20% lower than 15 years ago, according to labour ministry figures.”

      So who has benefited from the growth in GDP?

    • Spot on. The politicians and their collaborators in the public sector cooked the books to get into the EU. Who’s to say that they are not doing it again.
      Health and education have been allowed to crash, corruption is rife, rail infrastructure is dodgy etc. etc.

  3. The likes of Blackrock which holds 10 trillion of ‘assets’. Vulture capitalists buying up the world, with legal and political systems protecting them, not protecting people.
    The bailout bailed out banks, not people and the people will be debt slaves until 2060.

    The person cursed by the Greek media is of course Varoufakis and he said it in an interview here:
    https://jacobin.com/2024/03/greece-austerity-economy-far-right

    • Have you seen his 6 part documentary “In The Eye Of The Storm — The Political Odyssey Of Yanis Varoufakis” – it’s well worth it.

    • The banks and the EU wait like coiled springs for a Greek economic recovery, then will come the wave of rules and debt recovery which will keep the normal Greek people under the financial cosh for many years to come.
      EXAMPLE; The French rural people were made to change all thier septic tanks to mini water processing tanks, they were given 5 years to change all old style septic tanks , Greece is full of them .
      This is just 1 of many EU rules which will come like a tidal wave of expense. Greece is still not a net contributor ,but when it is ,it comes from our pocket