Why Greece’s Economic Crisis Is Not Over yet?


Europe has felt the effects of post-Brexit events following economic slowdown, refugee crisis, and political disintegration that have hit the nation below the belt. However, Greece has also been the most affected to the point that the country hit the headlines last summer with news that it was experiencing unstable political environment and economic meltdown.

One year later, Greece finally receives its third bailout ($96.1 Billion) from its lenders as a result of rigorous negotiations between the two parties. But this has resulted in more citizens suffering, while others trying to stay positive about the situation and probably make something out of it.

Since the government of Greece received their first, second and now third bailout, it has been forced to take extreme measures aimed at cutting down on national spending. As a result, people have been affected so severely that unemployment rates are rising beyond the normal and affecting all ages across the country.

What analysts have since reported concerning Greece’s current situation

DiaNEOsis released a report back in June and it depicted many Greeks struggling just to get by. The population currently stands at 11 million people. The same report revealed that the country was facing extreme poverty which was at 2.2% in 2009 and now 15% in 2015. This survey sampled some 1,300 individuals before arriving at a conclusion. The situation has caused some 1.6 million people to live below the extreme poverty line.

The effects of this economic slowdown on the Greece’s population in general

The effects of extreme poverty can be felt, both at the local and national level as well. As a result, this has caused many citizens to retreat the battle and only seek to fend for their families’ survival.
There is also widespread animosity between people. There seem to be some form of anger that is not directed to anyone in particular.

How Greece ended up signing the third bailout

bailoutSyriza’s government was elected last January, hoping that it would change the situation. However, even after trading with its European neighbours, it could not stabilize the economy, and this forced Syriza and PM Alexis Tsipras to sign the 3rd bailout. This happened even when majority of the Greece’ population was voting against more austerity.

But even before the third bailout had been signed, Tsipras had expressed his displeasure towards the possibility of giving in and signing the third bailout. As a result, this caused lenders to impose heavier conditions which involved making reforms and cutting back on spending. At the same time, the taxpayers were angry (and they still are) at the possibility of signing a third bailout to save the country. Everyone knew that the country was not going to stick to the tough bailout conditions.

Besides forcing Greek to cut expenditure in key areas such as defense, they’ve also been forced by lenders to reach what is called a budget surplus. This is where government spending would be less than revenue generated. The idea is that when spending is less than the revenue generated, the surplus will go towards reducing the country’s debts.

Other demands imposed on Greece by lenders called for a complete overhaul of the taxation system and labor market in general. This means that the public sector will not enjoy generous pensions anymore. Again, increasing the retirement age (as it has been the case) is no longer a viable option for the public sector.

But there is still light at the end of the tunnel

While unemployment rate stands at 23.3% as of last April – which is still the highest ever recorded in the EU), the economy is reported to have shown signs of early recovery from the recession. But this recovery is still very slow. As the government puts in effort in order to raise investment and economic activities, there is hope that an economic recovery will be underway.

In August 2016, the country reported a GDP increase of 0.3% for the second quarter. This was contrary to the early indications that it would contract by 0.2%. But if GDP figures are compared on a year-by-year basis, the economy reports a contraction of 0.7% for the second quarter when compared to the same period in 2015. Therefore, it is certainly not easy to live in Greece. Those who reside in this country would actually have to wait longer in order for the economy to recover fully.