Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
ΠΑΝΕΠΙΣΤΗΜΙΟ ΙΩΑΝΝΙΝΩΝ ΤΜΗΜΑ ΟΙΚΟΝΟΜΙΚΩΝ ΕΠΙΣΤΗΜΩΝ ΜΑΘΗΜΑ:ΑΓΓΛΙΚΑ ΓΙΑ ΟΙΚΟΝΟΜΟΛΟΓΟΥΣ ΙV ΘΕΜΑ: GREEK/ WORLD ECONOMIC CRISIS AND PUBLIC SECTOR ΔΙΔΑΣΚΩΝ ΚΑΘΗΓΗΤΗΣ: ΘΕΟΔΩΡΑ ΤΣΕΛΙΓΚΑ ΟΜΑΔΑ ΦΟΙΤΗΤΡΙΩΝ: ΠΑΠΠΑ ΔΗΜΗΤΡΑ (ΑΡΧΗΓΟΣ) Α.Μ:2494 ΝΑΚΑ ΧΡΙΣΤΙΝΑ Α.Μ:2475 ΜΑΡΙΑ ΑΠΟΣΤΟΛΟΥ Α.Μ:2339 ΧΡΙΣΤΟΔΟΥΛΟΥ ΠΑΝΑΓΙΩΤΑ Α.Μ:2562 ΕΞΑΜΗΝΟ: Δ ΕΑΡΙΝΟ Introduction The financial crisis that erupted in the US in September 2008 “hit” crucial the economies of many countries around the world. Each country has experienced or still experiencing the financial crisis differently depending on the structure of the economies. Soon the financial crisis transformed into an economic crisis when banks in their effort to maintain their capital adequacy restricted the credits to businesses and households. Greek Economic Crisis The international financial crisis struck soon the Greek Economy and emerged the structural weaknesses and the inability to control the expanded debt. Greece’s reliability on the International Monetary Fund(IMF),the European Union (EU) and the European Central Bank in order to avoid problems relating on wages which would have uncontrolled consequences for the entire euro zone. Regarding the public debt, the period after 1974 was a large lending period for Greece that led the debt to its swelling. More specifically, the Public debt increased during the 1980s and continued to grow the next decades because of the high public deficits. The debt caused a decrease in investments and consumption growth. Decades 1970-1979 Consumption 77,2 as % of GDP Investments 30,7 as % of GDP 1980-1989 85,1 1990-1999 90,1 2000-2009 88,8 23 20,6 22,6 Additionally the External debt of Greece (the amount which Greece owes to foreigners) was 82,5 % of GDP in 2009. The negative trade balance which occurred over the periods 1990-1999, 2000-2009 means that Greece imported more than it exported. Decades Trade balance as % of GDP 1990-1999 -10,7 2000-2009 -11,4 So, it was considered that the high public deficits, the irrational management of debt and expenditures, the external debt, the lack of exports and the low competitiveness were the most important factors of the Greek Economic Crisis. Greek/World Economic Crisis The Greek Crisis is concerned to be a part of the Global Economic Crisis because they have been caused by the same mechanism, the low rates of profits. The Global economic downturn of 2008 is the effect caused by the International financial crisis of 2007. The International financial crisis caused by the lack of liquidity became apparent in the Stock Market Indexes of developed countries and then in the whole world with dramatic effects on the banking system, trading and businesses such as rising unemployment, currency devaluation, new inflationary pressures etc. On October, 24, 2008 there were losses $3, 2 trillion in Eurasia, while foreign investors rushed into massive liquidations in Greece. The Athens General Stock Index fell below 1800 points despite the actual profits realized by the Greek banks and businesses. In Greece there were losses of 24 billion Euros in the second half of 2008, within 24 days Impacts of Economic Crisis The impacts of the emergence of an economic crisis can be devastating for all the countries. More specifically the Greek Economic Crisis has caused the following: liquidity problems in banks and companies, reduction in turnover, high unemployment, reduction in production, in national income, bankruptcy, low public revenues, high debt levels, high deficits etc. Greek crisis and public sector The public sector of Greece consists of various public entities which are responsible for the governance of the state, to serve and protection of citizens and the conduct of fiscal policy in Greek economy. The structure of the public sector differs in every country. Specifically in Greece consists of general government and public corporations and organizations, which they will be reported in detail below. Public bodies that constitute the public sector, usually determined by the Prime Minister or ministers of Greek government. The Greek economy for several decades was rising. As the period from 1950 until 1970, after the deep recession because of the Second World War, there was economic development in the country which was named the Greek economic miracle. Also a more rapid growth of the economy has been since 2000, when gross domestic product (GDP) ,that is the value of all goods and services produced in the country reached 5.9% in 2003 and 5.5% in 2006 . Namely surpassed the eurozone average. But the economy sank again into deep and sharp recession in 2008 due to the global economic crisis struck the eurozone and Greece as a member state. Percentages of GDP was -0.2% in 2008, -3.1% in 2009, -4.9% in 2010, -7.1% in 2011, -7.0% in 2012 and -3.9% in 2013. The negative rates of GDP means that the economy is growing at a negative rate. Consequently, the economy shrinks. Also, the public debt of the country increased, as indicative in 2011 was 170.3% of the nominal GDP of the country. (€ 335.141.000.000) Nevertheless, there are still hopes for quick recovery in Greek economy. The country by borrowing from the International Monetary Fund and the government accomplishing Reform succeeded in reach the public debt at 136.5% of GDP in early 2012. (€ 280.400.000.000) geo\time 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 EU (27 countries) 60,9 60,3 61,9 62,2 62,7 61,5 58,9 62,2 74,5 80 82,4 85,2 Greece 103,7 101,7 97,4 98,6 100 106,1 107,4 112,9 129,7 148,3 170,3 156,9 The table presents the annual data of general government gross dept as a percentage of GDP for the European Union and Greece such as mentioned on the website "eurostat" during the period 2001 to 2012. The numerical difference between Greece and the European Union starts from 48.8% in 2001 and decline until 2003 reaching the smallest difference of 35.5%. Moreover, the difference grows increasingly until 2011 where we have the maximum difference of 87.9%. Finally, the difference is reduced to 71.7% in 2012. General goverment gross dept - annual data (percentage of GDP) 300 250 200 150 Greece 100 EU (27 countries) 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Diagrammatically, the above annual data presents the way the gross debt of the general government from 2001 until 2012. From the beginning to 2008 course is firm and for Greece and the EU. But in 2009 distinguished a increase in debt and both of them. The increase in the Greek debt is sharp and peaks in 2011. Since then has been declining. On the other hand, the EU debt has a slight rising. The public sector in Greek economy This section focuses on the public sector of Greece, consisting of the general government and public corporations and organizations, as mentioned in the "Introduction to Macroeconomics" Mr. Dimitris Hatzinikolaou. As seen from the chart below, the general government consists of the central government, local government and social security. On the other hand we have the public companies and organizations owned or controlled by the Hellenic state. Specifically the chart describes that the public sector concludes the general government consists of three areas which are listed below. Central government of Greece: Greece's government consists of an elected throughout the state which is responsible for any of the conduct of General Policy following the Constitution and Laws of the State. It consists of ministries which are determined by the prime minister. Local government: It is a management style that effectively serves the needs of each local society as well as they represent. Social Security: Is the system of state that protects every citizen against any threats to reduce the standard of living. The Public Enterprises and organizations are belonging to the Greek state and controlled by it. All these contribute to the emergence of the welfare state, which provides social services such as providing health and education to provide social rights to citizens. Impacts of Greek crisis in public sector In this section , it is very important to mention that the Greek crisis has affected the public sector in negative level . This outlook is supported by multiple arguments . Initially since crisis expanded in Greece it is remarkable that the wages of many public employees have decreased in half . However it is noticeable the fact that other public employees have been fired the last period because government cannot ensure them salaries of a satisfactory . Even more , central government every year measures revenues and expenditure of state . From 2009 and after the budget is deficit . Thus government have decided to reduce public expenditure and increase taxation to the public .In this way the budget cuts some important programs such as subsidisation of the unemployed or funding for establishing hospitals and other public projects . Hence because government seeks to prevent bankruptcy borrows from external banks . However the money that are intented to reduce deficit are abused by public officers . It is also worth mentioning that government in order to overcome Greek crisis negotiate the selling off of public property . Moreover , Greece is a country that has proved that can exceed the difficults . Similarly , Greece can get out of the crisis one day . However it is necessary to examine some basic points about the crisis . Firstly , the Greek fiscal crisis erupted in the autumn of 2008 so it would be essential a short report to deficit in Greece these years . According to data the deficit as a percentage of GDP is 15,6 in 2009 . However in 2013 deficit drops to 5,5 and today is about 4,6 so it is obvious that there is a reduction during these periods . Even more government managed to balance the budget , create primary balance of surplus and remained in euros . Conclusion The economic policies of the last three decate have brought Greece to the brink of bankruptcy. Reforms implemented in other countries earlier postponed continuously in Greece . This had as a result the Greece be found with a non – productive public sector and a low competitiveness . However the positive point is that there are bands for furthermore development and progress . Thus Greece is managed to overcome the crisis , to consolidate the public sector and get out again on international markets if there is a consent of all both governments and citizens.