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Greece has one of the best-performing economies in the euro zone. The country has a capitalist economy with the public sector accounting for about 40% of the GDP. The Greek tourism industry remains thriving and its contribution in the GDP growth is considered important for foreign exchange earnings. Greece is a global leader in shipping (ranking first in terms of ownership of vessels and third by tonnage and flag registration). Exports of manufactured goods including telecommunications hardware and software, agricultural products and other foodstuff and fuels account for a significant part of Greek income. The country is the largest investor in southeastern Europe as far as the previous sectors are concerned. After the end of the Greek Civil War in 1949 and for more than two decades Greece achieved the second highest economic growth rate in the world after Japan, resulting in a dramatic improvement of living standards (the "Greek economic miracle"). Since Greece became a full member of the European Union, on January 1, 1981, it has benefited from cohesion funds, along with Portugal, Spain and Ireland. Those funds have proven particularly helpful to the nation's economic development since the 1980s. Starting in 1989, Greece joined the ranks of (22 at that time) "developed countries". The country enjoys a high standard of living, ranking 24th on the 2005 Human Development Index and 22nd on The Economist's 2005 world-wide quality-of-life index. Average per capita income in 2005 was estimated at $22,800 or 85% of the EU average in PPS (Purchasing Power Standards). Greek Economy has seen uninterrupted strong growth since 1992 and above the EU average continuously since 1994. Part of the Greek economy's impressive growth is attributed to the fact that the previous government tightened fiscal policy regulations in the run-up to the country's entry into the Euro zone, set on January 1, 2001 (Greek euro coins). Also liberalization of domestic markets, a modernized banking system, as well as massive investment ahead of the 2004 Olympic Games, have fueled the economy even further. With the collapse of communism in the early 1990s, Greece has seen a huge influx of foreign labor force, mainly from neighboring Albania, but also from Pakistan and Eastern Europe. Today the country is dealing with various challenges, including the reduction of unemployment which currently stands at 9.5%, the reform of the social security system, the partial privatization of the public sector, the overhauling of the tax system and the further reduction of bureaucratic inefficiencies. Forecasts predict that 2006 will be yet another year of substantial economic growth, estimated to reach 3.7%, which is above the European Union's average. Preliminary estimates of the International Monetary Fund for the year 2006 put the Greek GDP per capita in PPP at $23,518. Reduction of the fiscal deficit to the Euro zone target of 3% of GDP has also become a key issue. Shortly after its election, the new conservative New Democracy government revealed to the Euro stat agency that the previous figures supplied to it by the PASOK government as the basis of the Greek entry into the Euro zone were not correct (although even according to the "corrected" numbers, when calculated with the methodology still in force at the time of the Greek application for entry, the country had actually met the criteria for entry into the Euro zone). Under a negotiated agreement, the EU gave Greece a two year deadline (budgets of 2005 and 2006) in order to bring the deficit in line with the criteria of the European stability pact. In 2005, the new government managed to reduce the fiscal deficit by almost two percentage points and the goal of reaching the 3% target by the end of 2006 is now deemed as certain by Euro stat The Bank of Greece, now a subsidiary of the European Central Bank, functions as the nation's central bank. This bank is not the same as the "National Bank of Greece", the country's largest commercial bank. The 2006 Economic Agenda of the Greek government includes the privatization of several state owned companies as well as the creation of a new national airline that will replace Olympic Airlines. |
Greece Information: Inside
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