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2. ECONOMIC CRISIS IN GREECE
&
IT’S IMPACT ON EUROPIAN
COUNTRIES

3. INTRODUCTION TO GREECE
• Greece is a country located in Southern Europe on
the southern end of the Balkan point possessing an
archipelago of about 2,000 islands.

4. INTRODUCTION TO GREECE
• Capital – Athens
• Currency before Euro – Drachma
• Adopted Euro as a currency in 2000
• Main sectors with grater distribution to
GDP
(a). Tourism
(b). Shipping

5. INTRODUCTION TO EURO ZONE
• A geographic and economic region that
consists of all the European union countries
that have fully incorporated the euro as
their national currency.
• The euro zone consists
of Austria, Belgium, Cyprus,
Estonia, Finland, France, Germany, Greece,
Ireland, Italy, Latvia, Lithuania, Luxembourg,
Malta, the Netherlands, Portugal, Slovakia,
Slovenia, and Spain.

6. PHILOSOPHY OF EURO ZONE
• Single Market for free circulation of goods,
capital, people and services.
• Single currency to eliminate exchange rate
transaction costs and risks.
• Macroeconomic stability (e.g. low inflation)
and financial integration of the nations in the
Euro zone.
• Each member country to become stronger
against other big economies.

7. WHY GREECE IN TROUBLE?
Just like a household that spends
more money each month than it
brings in, Greece has piled up a
mountain of debt by spending
beyond its means.

8. THE REASONS BEHIND THE CRISIS
• 2004 Summer Olympic games
• 2007 US Recession
• Increase of labor cost
• Inefficient Pension System
• Early Retirement
• Benefits
• Tax Evasion
• Euro Currency
• Mismanagement
• Corruption

9. 2004 SUMMER OLYMPIC GAMES
In 2004 Greece was hosting for the summer
Olympic Games. The costs were huge.
Government had to build new airports, roads,
hotels, facilities and stadiums around the
Athens. Moreover, Greece had to complete
new transportation plan of rebuilding the
Athens infrastructure and clean up the whole
city. The costs of doing all of these points were
astronomically high, these costs created a high
budget deficit in the next year, beside the
decrease in tourism.

10. 2007 US RECESSION
As the Great Recession that began in
the U.S. in 2007–2009 spread to
Europe, the flow of funds lent from
the European core countries (e.g.,
Germany, France, and Italy)to the
peripheral countries such as Greece
began to dry up.

11. INCREASE OF LABOUR COSTS
However, labour costs increased more in
peripheral countries such as Greece relative to
core countries such as Germany, making Greek
exports less competitive. As a result, Greece saw
its current account (trade) deficit rise
significantly.
A trade deficit means that a country is
consuming more than it produces, which
requires borrowing from other countries.

12. INCREASE OF LABOUR COSTS
The main is the enormously high prices for the
trips and services for the visitors. Greeks
decided that they can easily make the prices
higher than it should be and overcharge the
tourists because of natural beauty of the
country and its historical and cultural places.
However, the tourists started to choose often
a close alternative – Turkey. Turkey has
beautiful beaches, excellent service and many
places to visit as well for much lower price.

13. INEFFICIENT PENSION SYSTEM
• Greece spent 17.5 percent of its
economic output on pension
payments.
• For example, a employee retires with
salary of 10,000 Euros, Greece pay
pension of 9,500 Euros

14. BENIFITS
• Government employees have had
some of the best worker benefits in
Greece. For example, an unmarried
daughter used to receive her dead
father's pension
• Some workers received atypical
bonuses for showing up to work on
time.

15. EARLY RETIREMENT
• In 2013, Greece's retirement age was raised by two
years to 67. According to government data,
however, the average Greek man retires at 63 and
the average woman at 59.
• And some police and military workers have retired
as early as age 40 or 45.
• There are also unique benefits for some workers.
Female employees of state-owned banks with
children under 18 could retire as early 43.

16. TAX EVASION
• The country has struggled to collect taxes
from citizens, especially the wealthy, which is
a problem when Greece's national debt is 177
percent of its GDP.
• For example, there is no tax on property. The
famous business in Greece was to take loans
and to buy many apartments , houses for rent.
What is more, after the crisis has come,
Greeks refused to start paying higher taxes in
order to save economy and began the
demonstrations and protests.

17. EURO CURRENCY
• Greece wants devaluation in the Euro
• Countries like Germany & France who are
not in debt problem like the Greece, a
reduction in the value of the Euro works
against their interests because
unnecessarily make their imports more
expensive and prices of the commodity
in the general interests.

18. Greece’s G.D.P. and Unemployment
Rates in Europe First quarter 2015

19. Debt in the European Union
( Fourth quarter of 2014 )

20. Greece’s Creditors

21. Here we present some
pictures that shows the
intensity of Greece crisis

34. GREECE CRISIS TIMELINE
• 20 October 2009 – Greece’s budget deficit is
expected to reach -12.5% of GDP.
• 22 October 2009 – Greece’s credit rating is
downgraded by Fitch, one of the Big Three credit
ratings agencies, from A to A−.to BBB+
• 16 December 2009 – Greece’s credit rating is
downgraded by Standard and Poor’s, another of
the Big Three credit ratings agencies.
• 23 December 2009 – Greece’s credit rating is
downgraded by Moody’s, the third of the Big
Three credit ratings agencies, from A1 to A2.

35. GREECE CRISIS TIMELINE
• 21 January 2010 – The Greek/German
10-year debt yield spread surpasses 300
basis points.
• 9 April 2010 – Greece’s credit rating is
downgraded by Fitch from BBB+ to BBB−.
• 22 April 2010 – Greece’s credit rating is
downgraded by Moody’s from A2 to A3.

36. GREECE CRISIS TIMELINE
• 14 January 2011 – Greece’s credit rating is
downgraded by Fitch from BBB− to BB+ to B+
• 7 March 2011 – Greece’s credit rating is
downgraded by Moody’s from Ba1 to B1.
• 29 March 2011 – Greece’s credit rating is
downgraded by Standard and Poor’s to BB− to
B.
• 1 June 2011 – Greece’s credit rating is
downgraded by Moody’s from B1 to Caa1.

37. GREECE CRISIS TIMELINE
• 9 March 2012 – Greek 10-year bond yields
reach a peak of 44.21% on the eve of debt
restructuring. 83.5% of Greek bondholders are
in the private sector.
• 25 May 2012 – The Athens Stock Exchange
general index falls below 500 points.

38. GREECE CRISIS TIMELINE
• 14 Jan 2014 – Greece posts a primary budget
surplus of 1.5% of GDP for the 2013 financial year
(€691 million).
• 10 April 2014 – Greece returns to financial
markets with the issue of €3 billion Eurobonds at
a yield below 6%.
• 9 May 2014 – The Greek Parliament approves the
Medium-term Fiscal Strategy plan 2015-2018.
• 23 May 2014 – Greece’s credit rating is upgraded
by Fitch from B− to B.

39. GREECE CRISIS TIMELINE
• 25 January 2015 – The Greek legislative election is held. Syriza
wins a historic victory.
• 26 January 2015 – Syriza and the Independent Greeks join to
form a new coalition government.Alexis Tsipras is sworn in as
the new Prime Minister.Yanis Varoufakis becomes the new
finance minister.
• 20 February 2015 – The Eurogroup brokers an agreement
between Greece and the eurozone for a four-month loan
extension.
• 27 June 2015 – Prime Minister Tsipras announces a referendum
on a bailout agreement, to be held on 5 July 2015.
• 28 June 2015 – The Greek parliament approves the referendum,
with 178 votes for and 120 against.

40. GREECE CRISIS TIMELINE
• 5 July 2015 – The Greek bailout referendum is held.
Over 61% vote against the proposed measures by the
Juncker Commission, the ECB and the IMF.Antonis
Samaras resigns as leader of New Democracy and is
succeeded by acting leader Vangelis Meimarakis
• 6 July 2015 – Finance minister Varoufakis resigns and
is replaced by Euclid Tsakalotos.
• 11 July 2015 – The Greek parliament approves the
government proposal about bailout plan. 251 MPs vote
for the proposal but 17 MPs of governmentcoalition do
not support.

41. GREECE CRISIS TIMELINE
• 13 July 2015 – Greece and Europeans creditors strike deal
for 86 billion euros bailout over three years, though it must
be approved by the parliaments of all of the Eurozone
member states.
• 16 July 2015 – The Greek Parliament approves the first
round of measures (“prior actions”) required by the
creditors, including changes to pensions and taxes, by 229
to 64 despite 21% of Syriza MPs voting against,and some
violent protests.
• 17 July 2015 – The cabinet is reshuffled. The left wing
deputies who revolted against the new bailout agreement
are sacked from government . German parliament approves
the start of negotiations for the third bailout programme
for Greece.

42. GREECE CRISIS TIMELINE
• 14 August 2015 – Greek parliament approves the
package of measures for the third bailout package. 222
MPs voted for the agreement, 64 against and another
14 abstained or were absent. 32 Syriza MPs voted
against and another 11 abstained.
• 20 August 2015 – The prime minister Alexis Tsipras
resigns and proclaims elections for 20 September.
• 27 August 2015 – Vassiliki Thanou was sworn as
caretaker prime minister until 20th September
election.
• 20 September 2015 – The Greek legislative election is
held. Syriza wins with 7.5 point over New Democracy.

43. Crisis Impact On European Countries
First off, they'd lose real money here, as in
the hundreds of billions. Greece's
government hasn't just gotten 240 billion
Euros, but its banks also have received 89
billion Euros in loans from the ECB that
might be defaulted on in the case of euro
exit.

44. Crisis Impact On European Countries
Second, there'd be some
contagion. Borrowing costs could creep
up for Italy, Spain and Portugal, but the
fact that the ECB is already buying their
bonds and has promised to buy as many
as it takes to keep their interest rates low
means they shouldn't rise that much.

45. Crisis Impact On European Countries
Third, all this uncertainty should
make the euro fall further,
boosting their exports in the
process.

46. Another Solutions
• Greece leave the euro Zone.
• Reform the tax code.
• Devaluation of Euro.
• Reform the pension system.
• Cut spending.
• Selling the Islands.

47. Conclusion
• The EU, IMF, ECB lending Greece to solve the
underlying program. But the maximum money
is spent for repayment of debt and not for
productive use.
• Though they are pumping money in the
Greece, they are not sure about the future of
the Greece Economy.
• Now the condition is in dilemma, Whether to
save Greece or let it go default.

48. Greece’s successful recovery can lead to
European recovery and the world’s. Let
Greek thought become a leader of action
too.

49. ANY QUESTIONS ?,
IDEAS & COMMENTS.
Ask, share & tell, it might be worth Billion Euros.

50. THANK YOU
For Watching & Hope You Enjoyed Our
PowerPoint.
PRESENTED BY:
Chandra Sri.