This for people who are giving a starter presentation on greece financial crisis.

1. GREECE – A CASE STUDY

3. Availability of capital
• Formation of Euro Zone
• Savings doubled to $70 trillion
dollars in 5 yrs
• Investors looking for
alternatives

4. Effect of excess capital
• Low cost of Borrowing- paid to borrow !!!
• Increased social security expenses
• High cost of Production
• Incompetent pricing in global market

5. International Trade Imbalance

6. Loss of Investors Confidence
Loss of Investor Confidence
• Non compliance of T & C’s
- Budget Deficit 3% of GDP
- Debt level – 60% of GDP
• “AAA+“ – was that right ?

8. Pre 2008 Era
 Availability of cheap debt
 Capital inflows were not used to help
the economy grow
 Beginning of the global financial crisis
 Shipping and tourism industry affected
by the changes in business cycle
 Debt began to pile up rapidly
2000 2004 2008

9. Post 2008 Era
Global financial crisis of 2008-09 strained
public finances
Fear of European sovereign debt crisis started
in early 2010
Difficulty in raising funds
Bailout package requested from EU & IMF
Debt rating downgraded to “Junk” status.
Worldwide impact on stock markets
2008 2012

10. Possible spread to other Countries

12. Measures adopted
• Bailout package
• Rescue package
• European Stability Mechanism
• European Commercial Bank
• Austerity Measures

13. ESM
Austerity
Package
2. Rescue Package
1. Bailout Package
4. ECBESM
3.
Austerity
ECB
Greece Crater
ESM
Rescue Package

14. Increasetax retirement age
New of is levied on
from 60 to 65
electricity charges
45% 23%
Privatization by
Luxury tax increased by 10%
disinvestment
Income VAT
Tax
Reduction in number of
New duties levied on Petrol
19%
40%
Municipalities
Duties on imported cars
Big cuts in public employee
increased by 30%
expenditures

15. Other measures
Sale of Assets to Other Nations
Conversion of Euro into the Earlier
Currency “The Drachmas”

17. Unemployment rate at 19.8%
• Highest since Greece joined Eurozone
• 230 thousand people lost job in last year
• @42.5% for 15-24 age group, 22.6% for 25-34

18. Unemployment benefit only for 1 Year
• < Euro 500 per month
• 280k receive state benefits
• Of the total 811k unemployed

19. 7 out of 10 considering
working abroad
• Unemployment rate to reach 20% in one year
• Economy’s biggest problem
• 5% long-term unemployed

20. 65,000 Retail stores closed
• Private Sector wages cut by 10-20%, Govt. 20-30%
• Consumption fell 8.6%, HH reduced spending by 1.6B euros
• Consumption is Greek economy’s driving force, production lags
behind

21. NGO support critical
• Significant increase in the number of people
relying on NGO’s
• 25% increase in homelessness
• At the main canteen, 3500 people/day come
for food & clothing, compared to 100
people/day 5 years ago
• Average age of people seeking help reduced to
45 from 60 in 2 years

22. Debt crisis causes political turmoil
• 87% said they are unhappy with the quality of their
lives
• > 100k supporters/day irrespective of the parties
• Support for being part of Euro came down to 58%
from 72%

23. Change in Leadership
• PM George Papandreou quits in Nov 2011
• Lucas Papademos to lead the new unity Govt.
• No party have enough support to win
• Rejection of the current political system has
added to the uncertainty

25. EXPORTS
INDIA’S EXPORT PROFILE
Region FY 2010 (%) FY 2011 (%)
EU Countries 20.20 18.60
Africa 5.80 6.50
Asia 21.80 22.70
WANA 22.00 22.60
ASEAN 10.10 10.90
North America 11.60 10.70
Greece 0.25 0.14

26. FOREIGN DIRECT INVESTMENT
1% 1%
Mauritius
5%
Euro Zone
7%
Singapore
8%
46% USA
UK
15% Japan
UAE
Switzerland
17%

27. FII MOVEMENT
FOREIGN INSTITUTIONAL
Financial FII Flows
INVESTMENT (US mn $)
Year
2000-01 1,847
US mn $ FII Flows 2001-02 1,505
2003-04 10,918 2002-03 377
2004-05 8,686 2003-04 10,918
2005-06 9,926 2004-05 8,686
2006-07 3,225 2005-06 9,926
2007-08 20,328 2006-07 3,225
2008-09 (15,017) 2007-08 20,328
2009-10 29,048 2008-09 -15,017
2010-11 29,422 2009-10 29,048
2010-11 29,422

28. EXCHANGE RATES

30. CONTROVERSIES
• Rating agencies suffer from a conflict of
interest
• Role of the English language press questioned
• Hedge fund managers launch bearish bets

31. WILL GREECE SURVIVE?