Country Analysis - Greece

Topics: Unemployment, Macroeconomics, Gross domestic product Pages: 5 (1483 words) Published: July 14, 2013
The economy of Greece is the 34th or 45th largest in the world at $290 or $292 billion by nominal gross domestic product, which is stated by World Bank statistics for the year 2011. As of 2012, Greece is the thirteenth largest economy in the Europe. In terms of per capita income, Greece is ranked 29th or 33rd in the world at $27,875 and $27,624 for nominal GDP .

The Greece economy mainly depends on the agricultural sector which take a lot of portion of the output level of the country. This is because of its land is blessed with the presences of mountains and sea. The advantage of its land structure give the country on agriculture such as fishing and herding. Other than that, its economy also revolves around industrial sector, such as marble, cement and cigarettes production.

In the past decades, Greece has experience an increase in economy production especially between the year 2000 to 2008. The government have increase the level of expenditure to cope with the economy. During that period the wages are double the amount before it especially in the public sector which is the government’s main focus. But the rapid expansion came at a heavy price. The Greek government’s budget deficit has risen drastically over the years. The GDP has risen from 3.7% in 1998 to 13.6% in 2009. As a result, its external debt ballooned rapidly. Various factors have put Greece in big trouble. The country didn’t obey its fiscal policies and keeps on spending high. Further, the nation has a history of excessive military spending, the highest in the European Union and second highest in the North Atlantic Treaty Organization (NATO) after the United States. The average Greek defence spending, which is around 3.3% of GDP compared to the average of 1.7% for other European NATO countries, is really a threat to their economy. Eventually, Greece economy have fall down on to recession. The country is in crisis. For further understanding, the economy of the Greeks can be analyse in terms of the macroeconomic objectives.

GDP GROWTH RATE| 0.20| -2.80| 0.46| |
| | | | |
GDP ANNUAL GROWTH RATE| -5.60| -5.70| 0.51| |
| | | | |
GDP PER CAPITA| 12653.44| 13574.22| 9348.30| |
| | | | |
GDP PER CAPITA PPP| 26891.99| 28409.60| 17065.90| |
| | | | |
GDP| 298.73| 304.87| 96.99| |
Figure 1
From figure 1, the average of all the components of GDP are in a decreasing phase, although the growth rate has an increased figure, it is not high enough to cope to the recession and didn’t affect the overall GDP components.

As stated in the graph above, the growth rate has just only been increase in 2011 and for the past several years, it has its up and downs but for the overall, it is a fall in growth rate from 2008 to 2011. This has in turn, shifts the aggregate demand (AD) curve to the left. From the year 2008, Greece have a downturn economy and possibly it is the worst among the European countries.

The reason of such a recession is maybe due to its decline in investments not to mention the lower contribution of exports earnings. Other than that, the government have reduced its spending because of the overwhelming debts and consumption is also declining. The sign of recession, firstly noted during the third quarter of 2008 and it continues until the first quarter of 2011. All these can be simplified from a graph below.

From the graph it clearly shows that consumption, investment, government spending are all declining, except for the trade which is positive. But for the overall, it makes the GDP to decline throughout the years. Clearly that investments are the main factor that contribute to the downfall which reach the lowest on the third quarter of 2009. Referring to the five sector model, as investment decrease, firms will have a lower budget for production, this will result in lower production of goods and...
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