Greece still an economic pariah
Fiscal front aside, ECB data show the country remains a eurozone laggard despite upcoming bailout expiry
The impact of the crisis remains strong on the Greek economy despite the upcoming expiry of the bailout program, with European Central Bank data showing that Greece had the lowest growth rate in the eurozone in 2017, among the lowest gross domestic product per capita, and negative credit expansion and savings rates.
According to the ECB’s annual report on the eurozone economy, the only sector where Greece fared well was the fiscal one, thanks to the excessive primary surpluses brought on by the bailout agreement and the policy choice of excessive taxation.
GDP increased just 1.4 percent last year, against a eurozone average rate of 2.3 percent, meaning that Greece missed the chance of tapping into the bloc’s growth momentum after a long recession. The country’s failure to ride the wave of growth was mainly due to consumption going up just 0.1 percent against a eurozone rise of 1.6 percent.
Workers’ takings also grew by 0.1 percent in Greece and while it was the first time since the start of the crisis that they did so, it was a marginal gain compared with the eurozone increase of 1.6 percent.
When it comes to the savings rate, the gap between Greece and its eurozone peers is even more striking, as it saw an annual drop of 6.8 percent last year, against a rise of 12.1 percent in the eurozone and 10.8 percent in the entire European Union. The reason for this poor performance is that Greeks are having to tap into their savings in order to cover their growing obligations.
On the other hand, Greece showed (with 2016 data) a comfortable surplus of 0.5 percent of GDP, against an average deficit of 1.5 percent in the eurozone, and the highest primary surplus in the bloc, at 3.7 percent against just 0.6 percent in the common currency area. Yet the Greek state still spends more than its peers, as expenditure came to 49.7 percent of GDP against a eurozone mean rate of 47.6 percent. This shows that the surplus has relied more on excessive taxation and less on spending containment.