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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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