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Transcript of Greece
Living in Greece
Unemployment: 27.3% (Aug 2013)
EXPANSIONARY FISCAL POLICY
0.04% population growth rate
Life expectancy of 80.18
Median age of 43.2
Religion and Ethnic Groups
Direction of the Economy
Critical Thinking Question
How does a lack of multiculturalism effect the economy of a country?
GDP - Gross Domestic Product
Gross Domestic Product
The GDP is measured through the World Bank Group
The Gross Domestic Product (GDP): 249.10 billion US dollars (2012)
From 1960 until 2012, Greece GDP average: 98.5 USD Billion
All time high: 341.6 USD Billion (December 2008)
All time low: 4.4 USD Billion in (December of 1960)
Around .4% of the World's economy is represented through he GDP value of Greece.
As of now, the trend can be seen that the GDP is in fact decreasing more and more every year, and in the last five years, when the GDP was the highest in Greek's history it has dropped approximately 100 billion dollars
Unemployment Rate in Greece is reported by the National Statistical Service of Greece.
Unemployment Rate in Greece average: 13.36% (1998 until 2013)
All time high: 27.80% (October of 2013)
All time low: 7.30% (May of 2008)
Recent changes to the rate:
Unemployment Rate in Greece increased to 27.80 percent in October of 2013 from 27.70 percent in September of 2013.
Inflation Rate in Greece is reported by the National Statistical Service of Greece.
The inflation rate in Greece was: -1.70 % (December 2013)
Inflation Rate in Greece average: 9.19 % (1960 to 2013)
All time high: 33.70 % (January 1974)
All time low: -2.90 % (November of 2013)
In Greece, the most important categories in the consumer price index are:
food and non-alcoholic beverages (17%)
hotels, coffee shops and restaurants (11%)
clothing and footwear (9%)
furnishing and household equipment (7%)
recreation and culture (5%)
Education, alcoholic beverages, tobacco and other goods and services account for the remaining 14 percent of total weight.
GDP Growth Rate
GDP Growth Rate in Greece is reported by the Hellenic Statistical Authority.
The Gross Domestic Product (GDP) in Greece expanded 0.20 percent in the first quarter of 2011 which is the most recent report.
From 2000 until 2011, Greece GDP Growth Rate average: 0.5 Percent
All time high: 3.8 Percent (March 2003)
All time low: -2.8 Percent in December of 2010.
Service based economy
One of the top tourist destinations in the world.
Following the entry to the European Union in 1980 and the Euro Area in 2000, the Greek economy had been experiencing tremendous growth.
This expansion was because of access to cheap credit and growth of public sector.
In 2008 the budget deficit and individual debt had reached unsustainable levels.
Greece faces the worst crisis since 1974 and tough reforms enforced by the IMF and the European Commission as part of the bailout program are taking place
Greece Unemployed Persons
Unemployed Persons in Greece is reported by the National Statistical Service of Greece.
The number of unemployed persons in Greece increased to 1326.18 (October 2013) from 1315.89 (September 2013).
Unemployed Persons in Greece average: 706.33 (2006 until 2013)
All time high: 1390.76 (April 2013)
All time low: 324.78 (May 2008)
What does this mean:
Economists generally agree that high rates of inflation are caused by an excessive growth of the money supply.
Low to moderate inflation may be attributed to fluctuation in demand for goods and services, or changes in available supplies (Scarcity of resources)
Low inflation may reduce the severity of economic recessions by enabling the labour market to adjust more quickly in a downturn.
The task of keeping the rate of inflation low and stable is usually given to monetary authorities.
Generally, these monetary authorities are the central banks that control the size of the money supply through the setting of interest rates.
Overall, as you can see,
the Gross Domestic Product of Greece has been decreasing over the years. It has decreased almost 100 billion in the past 6 years!
The lowest of all indicators have been recorded for the recent years.
The GDP growth rate has been fluctuating for the past few years. After a couple of quarters of negative growth, it has finally started going up but at a very low level.
Unemployment is rising at tremendous rates. The number of unemployed people is shocking.
The inflation rate is negative value, causing deflation. In deflation, the value of the goods of the country decreases. Since the euro is so strong, it is able to purchase much more of Greek products than before which is not good.
Why is deflation bad for Greece's economy?
Economists generally believe that deflation is a problem in a modern economy because it may aggravate recessions and lead to a deflationary spiral.
A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price
This means that as in inflation, the value of the currency, the purchasing power decreases, in deflation the value of products sold decreases.
Record unemployment, wage cuts and spare capacity in the economy continued to pull prices down, making the economy more competitive but threatening to hurt Greece's efforts to rein in debt.
So long as it is temporary, deflation at this point is not necessarily a problem. . . It provides some support for disposable income
Based on Greece's financial situation, what do you think is an appropriate time frame over which the fiscal policy should begin to balance out the economy?
"Cost of Living in Null, Greece." . Prices in Null. N.p., n.d. Web. 13 Jan. 2014.
Craggs, Ryan. "Athens City Workers Strike To Protest Job Cuts." The Huffington Post. TheHuffingtonPost.com, 23 Sept. 2013. Web. 13 Jan. 2014.
"Expat's Manual." Living in Greece : A Guide to Moving to Greece as an Expat : Expat Info Desk. N.p., n.d. Web. 13 Jan. 2014.
Where is the money coming from?
Greece will have to spend almost 5 % of its GDP just to pay the interest on their debt this year.
Is it really the best choice to spend your way out of a recession or will all the increased debt come back to bite you later on?
Do you think that deflation is good for Greece's economy at this point in time? What sort of effect would it have on GDP and unemployment and the economy as a whole?
Do you think Greece will be able to get out of this economic crisis?
Loans to Corporations
Show Germany and the EU these plans to stimulate the economy. Convince them to lower interest rates to facilitate the borrowing of money for the expansion projects.
To get the private sector expanding again, the government will provide low interest loans to be used on expansion projects.
The Greek pension system has become incredibly wasteful, with some former state employee's estates collecting payments even after the person has died.
These and other inefficiencies abound, and have to be restored to a reasonable level.
Greece's infrastructure is outdated compared to nearby countries. The hotels, airports, ports, and roads are not of sufficient quality to attract tourists or get them to go back, especially with Italy and France great nearby options. Revitalizing the infrastructure is imperative to get more people
to visit Greece and spend money on their vacation.
Greece's government workforce has many long term employees that have lost motivation and can be convinced to retire by
buying out their contracts. This will free up space for a younger, more efficient and enthusiastic workforce.
Tax cuts will encourage spending,
Infrastructure improvements will create
short term construction work and long term grow the tourism industry.
Loans to corporations will help them expand, creating more jobs in the private
The stock market growth encouraged
by the policy will be good for businesses, investors.
The debt will grow temporarily and possibly
dampen Greece's worldwide image for now.
The borrowing and printing of money will devalue the currency, lowering purchasing power for all citizens.
Te reduced interest rates can harm retired
citizens who depend on interest earned
from their savings.