Greece: From a bankrupt state to a European growth miracle!

Greece: From a bankrupt state to a European growth miracle!

Ten years ago, Greece was in a deep economic crisis that almost led the country to bankruptcy. In June 2015, unemployment was at an all-time high of almost 25 percent and national debt exceeded 180 percent of gross domestic product (GDP). During this period, the country's bonds were downgraded to junk status, further weakening confidence in the Greek economy. On June 27, 2015, the European Central Bank halted capital movements, leading to the introduction of strict capital controls that limited cash withdrawals to 60 euros per day. The international community provided aid packages worth over 300 billion euros to save Greece from bankruptcy. The last rescue package expired in 2018.

Since then, Greece has recovered significantly economically. The current debt ratio is around 150 percent of GDP and is expected to fall to 142 percent. The national debt amounts to around 360 billion euros. The country has recorded an average economic growth of 2.0 percent annually since 2018. The unemployment rate fell from 24.9 percent in 2015 to 9.4 percent in 2022, while employment increased to 4.3 million jobs - an increase of 18 percent compared to a decade ago. Such progress is due to comprehensive reforms implemented since the crisis.

Economic reforms and stability

Greece's economic comeback is primarily the result of effective reforms and political stability. The reforms include a pension reform that increased the statutory retirement age to 67, as well as tax reforms that increased VAT to 24 percent and reduced the corporate tax rate from 29 percent to 22 percent. The digitalization of the tax system and administration has also increased efficiency and reduced costs. The results of these measures are clearly visible: last year Greece achieved a record surplus of 4.8 percent or 63 billion euros.

In addition, the youth unemployment rate fell from 52 percent in 2015 to 25 percent. These more positive figures are also due to a more sustainable economic orientation, particularly focused on the services sector and tourism. Other important sectors include the cultivation of olives, wine, fruit and vegetables, as well as food production and the textile and chemical sectors. Despite these positive developments, a full recovery from the crisis that peaked between 2010 and 2016 has not yet been achieved. Around a quarter of the economic power was lost during this time.

Outlook for the future

Greece has worked its way from the bottom of the Eurozone into a high-growth region of Europe. According to Deutsche Bank, GDP in 2022 will be 208 billion euros, which is still below the 242 billion euros in 2008. Real wages also only reached 71 percent of their pre-crisis level in 2022. But the course for sustainable economic stability has been set. Continued reforms and positive economic development could help Greece overcome its challenges and consolidate its place in the European economy. Focus and Deutsche Bank report on these significant developments and the country's future prospects.