What state?
It managed to reduce its debt-to-GDP ratio faster than any other European country last year.
In contrast to its euro partners, it also had more income than uses for money – so the basic balance of its government finances was in the plus sign in 2022.
In addition, its economy grew significantly faster than, for example, the Nordic countries, Germany or France.
The country is Greece, which is still seen as a financial loser even in Finnish social media discussions. That image is no longer true. Greece has clearly improved its economy in recent years.
Headaches in Brussels and Frankfurt are now caused more than Greece by, for example, the sluggish economy of Germany, the largest euro economy.
Read more: Even 16-year-olds are now voting in Greek elections.
Of course, the country that hit rock bottom still has a long way to go to make up for the years lost in the debt crisis. The people have become impoverished and inflation is punishing the Greeks after years of strict economic austerity. The debt ratio is persistently the highest in Europe.
Although the economic and social misery caused by Greece’s long crisis has not been completely cured, the country is in a much healthier financial position than when it went to the polls today.
The Greek economy grew by no less than 5.9 percent last year, despite the energy crisis, the Russian invasion and accelerating inflation.
The debt ratio shrinks due to inflation and economic growth, as the amount of debt relative to the size of the Greek economy decreases. The country reduced its debt relative to the economy by 23 percentage points last year.
The future prospects are brighter than many other EU countries. Valued The Economist economic magazine (you will switch to another service) even calls Greece a European success story.
We listed six reasons why the Greek economy has risen to the surface.
1. EU subsidies help investments
Billions worth of investments were made in Greek ports and maritime infrastructure last year. They have been spurred on by the EU recovery fund subsidies received (you switch to another service).
The EU has promised the country a total of 18 billion euros in support money, mainly for investments that prevent climate change and promote digitalization. So far, about 13 billion euros have been handed over to it.
A jackpot of EU money was given to Greece because the corona pandemic caused great destruction there due to the weaknesses of the health care system, and the death rate was higher than elsewhere.
As a result of the energy crisis, Greece has increased investments in renewable energy. It has also opened new LNG terminals and improved electricity grids across its vast archipelago.
One of the top projects of the current government has been the digitization of the country. Greece’s investments in grids compete, for example German (you switch to another service) with, where digital development has progressed slowly.
The technology industry has started to grow little by little. EU funding and venture capital fuel startup companies whose combined market value is already estimated to be eight billion (you switch to another service)euro. Ten years ago, there were no growth companies in Greece.
2. Shipping won in the pandemic
Greece is helped by its location at the crossroads of Europe, Asia and Africa. It is a transit country for goods and a shipping superpower.
About 90 percent of Europe’s foreign trade goes by sea. More than half of those sea transports move on ships owned by Greeks.
Greek shipping companies have invested in ships and vessels even during the corona pandemic, and the country’s merchant fleet has strengthened compared to other shipping countries in the world.
The shipping companies have benefited in part from the transportation of Russian oil, which is not touched by many other tanker companies in the world.
3. The market has been opened to foreigners
There are clearly more foreign companies in Greece than before the crisis.
The 14 regional airports of your example country have been operated by the German-owned Fraport since 2015. The majority of the port of Piraeus is owned by the Chinese company Cosco, which has modernized the port.
Foreigners have helped Greece, above all, in digitalization, because before the crisis there was almost no know-how. Global giants such as Microsoft and Pfizer have recently announced flagship investments totaling billions of euros in Greece.
4. Tourism and private consumption are lively
After the corona pandemic, private consumption in Greece has been lively. Tourism is breaking records.
According to the country’s Ministry of Tourism, there is still more to come from the current year better (you switch to another service).
Even before the start of the summer season, there have been more flights to the country from China and Saudi Arabia. Greece has increased the marketing of its tourism services also in Australia, for example.
A large part of the foreign direct investments coming to Greece still goes to the development of real estate and tourism.
5. More taxes have been collected
Greece’s public finances were in better shape than expected last year. It is above all thanks to higher tax revenues.
According to the EU Commission, the most increased were the accumulations of value added tax and direct taxes such as income taxes. One of the problems of recovery from the economic crisis has been tax evasion.
Competing for the new prime minister position in Sunday’s election Kyriakos Mitsotakis promised tax cuts, business-friendly reforms and a more modern public administration when he came to power less than five years ago.
Mitsotakis has largely delivered on his promises: several taxes have been reduced, foreign direct investments have reached record levels, and digital services are being used more widely in the Greek administration.
6. Creditors’ trust was regained
Investors have begun to trust Greece’s debt repayment ability again. Greek bonds are no longer junk in their eyes.
Now Greek bonds are trading at roughly the same yield as their Italian equivalents. So it gets a loan again at a reasonable price (you switch to another service) from the market.
The situation has been helped by the fact that most of Greece’s public debt is owed to the Eurozone authorities. The EU has given Athens decades to repay the loans with low interest.
Governor of the Bank of Greece Yannis Stournaras believes (you switch to another service)that the credit ratings will improve even more before the summer.
One of the economy’s biggest questions in the future is how the country will manage to maintain the trust of the financial markets. Therefore, Greece must continue to quickly reduce the government debt and strive to secure economic growth in the future.
The sources of the article have been publications from Eurostat, the EU Commission and the ECB, as well as extensive international media.
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