Greeks Fear Meltdown and Unrest in Eu's Weakest Economy
With huge public-sector debt and high unemployment, the recession could hit the country very hard
For the movers and shakers of Greek shipping, it is a sight that a few months ago would have been unthinkable: idle tankers and cargo vessels lined up like ghost ships in Salamis Bay.
Nearly 2,500 years after the Greeks fought the Persians in the straits, the bay has become symbolic of another battle that is brewing on Europe's south-eastern front. The build-up of decommissioned ships, like the empty tourist shops and ancient sites devoid of happy holidaymakers, is symptomatic of the economic crisis that is enveloping Greece, the EU's weakest economy.
"The recession," declared today's left-leaning Eleftherotypia in a banner front-page headline, "is at our door."
Shipping and tourism ? at 25% the biggest single contributors to the country's gross domestic product ? are not the only sectors bracing themselves for a fall in foreign demand.
After years of enjoying high growth rates ? at 4%, almost double the eurozone average ? Greeks have been told to ready themselves for fiscal hardship. On almost every front they have been bombarded by bad news: that unemployment, currently at 7.4%, will worsen in the coming year; that economic growth will fall to near zero; that further austerity measures, in the form of taxes and government cutbacks, are almost certainly on the way.
Last week, in a move that dealt another psychological blow, the country became the first western European economy to have its credit-rating downgraded, highlighting fears over its huge public-sector debt, the worst in the 16-member eurozone, and making the prospect of further borrowing to finance it ever more costly.
Announcing the decision, the credit rating agency Standard & Poor's said the ongoing financial crisis had exacerbated "an underlying loss of competitiveness" in the Greek economy.
Today, in a report cataloging Greece's economic woes, the European commission said the country's exports, not least to the recession-hit neighboring Balkans, will also decline dramatically in the coming months. The Athens stock exchange, already at a five-year low, fell a further 2%.
The outlook could not be further from the economic renaissance that followed the 2004 Athens Olympics. With the exception of the Hungarians, Greeks are now the most pessimistic people in Europe, according to EU polls.
"A financial tsunami is on its way and Greece is less prepared than it should be to deal with it," said the political scientist Dimitris Keridis.
"Successive governments did not use the good times to put the country's economic house in order and now the bad times are with us."
Reining in a debt forecast to increase in 2009 to more than 91.4% of GDP is, economists agree, the single biggest priority for an economy racked by structural problems and thirsting for reform. But with their wafer-thin majority, the ruling conservatives have little room for manoeuvre. Trailing the opposition socialists by a steady 5 percentage points has made the task in hand even harder.
Unpopular reforms, unprecedented youth unemployment and disaffection over the economy caused riots in December that caused about ?1bn (?906m) of damage in Athens alone. Now, with unemployment rising and union unrest gathering pace, there are fears that Greece will soon erupt again.
"Every day shops are closing, people are being laid off, and factories are ?shutting down," said Stathis Anestis, spokesman at the Greek TUC, which represents 1.5 million workers. "And with the global economic crisis only just beginning to be felt here, there is worse to come. The social upheaval we saw in December is going to be nothing next to the explosion we are going to see in the coming months."
Nearly 2,500 years after the Greeks fought the Persians in the straits, the bay has become symbolic of another battle that is brewing on Europe's south-eastern front. The build-up of decommissioned ships, like the empty tourist shops and ancient sites devoid of happy holidaymakers, is symptomatic of the economic crisis that is enveloping Greece, the EU's weakest economy.
"The recession," declared today's left-leaning Eleftherotypia in a banner front-page headline, "is at our door."
Shipping and tourism ? at 25% the biggest single contributors to the country's gross domestic product ? are not the only sectors bracing themselves for a fall in foreign demand.
After years of enjoying high growth rates ? at 4%, almost double the eurozone average ? Greeks have been told to ready themselves for fiscal hardship. On almost every front they have been bombarded by bad news: that unemployment, currently at 7.4%, will worsen in the coming year; that economic growth will fall to near zero; that further austerity measures, in the form of taxes and government cutbacks, are almost certainly on the way.
Last week, in a move that dealt another psychological blow, the country became the first western European economy to have its credit-rating downgraded, highlighting fears over its huge public-sector debt, the worst in the 16-member eurozone, and making the prospect of further borrowing to finance it ever more costly.
Announcing the decision, the credit rating agency Standard & Poor's said the ongoing financial crisis had exacerbated "an underlying loss of competitiveness" in the Greek economy.
Today, in a report cataloging Greece's economic woes, the European commission said the country's exports, not least to the recession-hit neighboring Balkans, will also decline dramatically in the coming months. The Athens stock exchange, already at a five-year low, fell a further 2%.
The outlook could not be further from the economic renaissance that followed the 2004 Athens Olympics. With the exception of the Hungarians, Greeks are now the most pessimistic people in Europe, according to EU polls.
"A financial tsunami is on its way and Greece is less prepared than it should be to deal with it," said the political scientist Dimitris Keridis.
"Successive governments did not use the good times to put the country's economic house in order and now the bad times are with us."
Reining in a debt forecast to increase in 2009 to more than 91.4% of GDP is, economists agree, the single biggest priority for an economy racked by structural problems and thirsting for reform. But with their wafer-thin majority, the ruling conservatives have little room for manoeuvre. Trailing the opposition socialists by a steady 5 percentage points has made the task in hand even harder.
Unpopular reforms, unprecedented youth unemployment and disaffection over the economy caused riots in December that caused about ?1bn (?906m) of damage in Athens alone. Now, with unemployment rising and union unrest gathering pace, there are fears that Greece will soon erupt again.
"Every day shops are closing, people are being laid off, and factories are ?shutting down," said Stathis Anestis, spokesman at the Greek TUC, which represents 1.5 million workers. "And with the global economic crisis only just beginning to be felt here, there is worse to come. The social upheaval we saw in December is going to be nothing next to the explosion we are going to see in the coming months."
Use the feedback form below to submit your comments.
Use the form below to email this article to your friends.
- World Markets Plunge as Auto Bailout Collapses
- OPEC Cuts Production of Oil to Provide "Floor" for Prices
- Recession Will Be Longer and Deeper Than Previously Thought, Says Oecd
- Recession Could Last Long Into 2010
- EU Must Work With Us to Combat Recession, Says Barroso
- Food Prices Add 40 Million People to Number of Malnournished in Year
- From Berlin to Beijing, Chancellors and Presidents Feel the Strain
- EU Trio Press Germany for Bigger Contribution to Stimulus Plan
- 'Lost Decade' a Warning to West
- Millions of Chinese Graduates Out of Work After Fivefold Rise in University Places
- Merkel Resists Party Calls to Spend More to Tackle Recession
- Crisis Casts Fresh Shadow Over Holiday Hotspot
- Brussels Proposes £170bn Spending Plan
- Can Internet Companies Survive a Recession?
- What is a Recession?
- Causes of Economic Recession
- Congress Passes Historic Economic Bailout Plan
- Congress Struggles to Revise Bailout Bill
- House Vetoes Wall Street Bailout
- Lawmakers Say Deal on Bailout Reached
- Second Wave of the Housing Crisis
- H-1B Visa Program Spirals Downwards
- Recession Declared Officially Over, Unemployment Still Rising
- Consumer Sentiment Rises More than Expected
- Recession Fighting Back in July, New Recovery Concerns for Economy
- Leading Indicator Shows Recession May Soon End
- Large Swath of the Country Left Untouched by Recession
- Recession Blues are Bad for Your Health
- Obama Doesn't Blame Bush for Current Economic Crisis
- Economic Recession - What Happens During a Recession
- Benefits of Economic Recession
- Economic Recession and Depression - Definition and Difference
- Recession May be Coming to a Close, But Rough Waters Ahead
- US Economic Crisis: Impact on Automobile Industry
- Public Backlash Growing Over AIG Bonuses for Executives