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Spencer Blake

on 27 November 2012

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Transcript of Greece

Physical Forces Agenda Agenda

- Population & Culture
- Physical Forces
- Currency and B.O.P.
- Legal Issues
- Economic and Political Issues
- Investment Decision
- Questions Population and Culture Physical Forces Legal Issues Investment Decision

- Also known as the
Hellenic Republic
- Southeastern edge
of Europe Currency and Balance of Payments Political Issues Legal Issues Economic Issues Investment Decision Area: 131,957 square kilometres The Greek mainland is bordered by Albania, the former Yugoslav Republic of Macedonia, Bulgaria and Turkey
Also bordered by the Lonian Sea to the west, Aegean Sea to the east and by the Mediterranean Sea to the south Surroundings and Borders Landscape
Lowland Highest Point Mount Olympus in Thessaly at 2,917 metres
These mountains reappear in the south on the large peninsula of the Peloponnese, where they divide into several smaller ranges Climate
Mostly dry & temperate Infrastructure The state-run railroad system Has 8.5% of the world's ships and 16.5% of global capacity, Port-cities A network of ferries link mainland ports with the country's numerous islands
Ferry lines
Conventional ships and
"Flying Dolphins" (fast sea vessels), World Heritage Sites Examples: Acropolis, Temple of Epicurean Apollo, Olympia, Delos, Delphi Questions? Type of Government Greece is parliamentary republic on the separation and balancing of legislative, executive and judicial powers
Highest Law: Constitution Structure President
Regulates functions of the powers of the state
Elected in by Parliament (5 year term)
Needs to receive 2/3 majority of total members of parliament
Appoints the Prime Minister and the rest of the members of government
Current President: Karolos Papoulias Cabinet Composed of Prime Minister and Cabinet Ministers
Members of the cabinet and deputy ministers are jointly responsible for general policies of the government
Current PM: George Papandreou Terrorism in Greece Two central domestic terrorist groups:
"ELA" 17N Full name: "17 November"
Refers to the final day of the 1973 Athens Polytechnic uprising, a protest against Greek Military Junta
23 "convicted" assassinations
103 attacks on American, British, Turkish and Greek targets ELA Translated, ELA stands for "Revolutionary Popular/People's Struggle"
Mostly planned attacks on government property Corruption Index: 80th in 2011 with a score of 3.4
Dropped 2 places from 78th (3.5) in 2010
Dropped 38 places in the last decade Corruption Perceptions Index Basis of Law Human Rights Ranked 29th in Universal Human Rights Index in terms of "human development"
Xenophobic violence
Recognition rate for refugees
Police violence Greek Currency Growth and Stability Pact (GSP) Implemented fiscal policy guidelines: government deficit could be no more than 3% GDP while total debt must be under 60% Could Greece Abide by the GSP? Historically high debt and deficit levels prior to Euro transition
ECB (European Central Bank) had hopes that the GSP would control the issue, but it was accelerated Economic Statistics Capitalist, GDP (ppp USD) of $291.8 BN (ranked 44th in the world), which has fallen 10% since 2009 and represents about 2% of the EU;s total GDP
GDP composition: 3.3% agriculture, 17.9% industrial, and 78.9% services
GDP per capita is $26,600, appx 2/3 of the leading eurozone countries as well as Canada's Labour Force Composition: 65% services, 23% industrial, and 12% agriculture
Unemployment rate is currently 17.7%, representing a 86% increase from 2009, in which employment 9.5% most notably, youth unemployment has risen from 25.8% to 44.4%
Relatively stable unemployment rate over the same two year span; 7.5% charts from Cat Population &
Culture Currency & The Economy Political & Legal Issues Balance of Payments Type of Government Greece is a parliamentary republic based on the separation and balancing of legislative, executive and judicial powers
Highest law = Constitution President Judiciary Executive Legislative President Regulates functions of the powers of the state
Elected by the Parliament (5 year term)
Needs to receive 2/3 majority vote
Appoints the Prime Minister and the rest of the members of the government
Karolos Papoulias Cabinet Comprise of Prime Minister and Ministers
Members of the cabinet and deputy ministers are jointly responsible for the general policies of the government
PM: George Papandreou Domestic Terrorism
"17 N"
"ELA" 17 N "17 November"
Refers to the final day of the 1973 Athens Polytechnic uprising, a protest against Greek Military Junta
Assassinated 23 people in 103 attacks on American, British, Turkish and Greek targets ELA Translated, ELA stands for Revolutionary Popular/People's Struggle
Most planned attacks on government buildings/property Corruption Perception Index Human Rights Index Currency Transitioned to the Euro in 2002 at a rate of ~340 Drachma per 1 Euro Growth and Stability Pact Government deficit <3% of GDP
Total debt <60% of GDP Euro over the past 2 years: 5.6% decrease Economic Statistics GDP - $291.8 BN
Decreased 10% since 2009
Represents about 2% of the Eurozones's total GDP

GDP per Capital - $26,600
2/3rds for Germany and Canada's What happened to Greece's Economy? Spending Spree Availability of Credit 2007 - 2008 Artificial "Boom" Pension Plan Comparison: Greece
Retirees receive between 80% and 90% of their Wage Canada
Receive $530 bi monthly - approx. 40% of the average wage Fundamental Issues Tax evasion
Artificially high public sector wages
Aging population
Pension plans expensive to fund The Result
Failure to Follow GSP Guidelines Austerity Measures Deficit and Total Debt Comparison Negative Effects of Austerity Measures Lengthening the economic recessions
Reducing tax revenues
Depreciated the Euro
Borrowing rate is 1.75% to encourage consumer spending Impact on Businesses - Do Not Invest Greece's largest Company withdrew listings from the Greek stock exchange and moved them to Switzerland
Heavy taxes and economic uncertainty
Plants will remain open Impact on World Markets Eurozone manufacturing & export heavy countries have benefited
Depreciation of the Euro makes their goods more affordable Where do we go from here? 2) Greece exits the Eurozone and adopts the Drachma 1) Greece Stays 2) Greece Exits Potential Benefits Quicker recovery Potential Problems Debt would still be denominated in Euros What if Greece recovers too quickly? Could unravel the Eurozone Population Total Population: 11.3 MM (2011)
Male: 5.6 MM (49.5%)
Female: 5.7 MM (50.5%)
Growth rate: 0.06% (est. 2011) Age Demographics 0 - 14 years: 14.2%
15 - 64 years: 66.2%
65+: 19.6%
Median age: 42.5 years
2050 --> 65+ age group approx. 32%
Investment in health care and senior citizen care to increase Life Expectancy Life expectancy at birth (male): 77.6
Life expectancy at birth (female): 82.6 Family Size Average household size - 2.7
EU average - 2.4
Canada - 3.0 Income Average household net-adjusted disposable income is $22,134 USD a year
Minimum wage is 683.76 Euros/month
$884.58 CAD (assuming 52 week year and 40 hour work week, this equals $5.10/hour) Housing Recent statistics show an overcrowding rate of 25.5%
47.7% decrease in total volume of building activity in the country comparing July 2012 to the same month one year earlier Major Cities Athens (Capital): 3,252,000
Thessaloniki: 834,000 Cultural Issues
Greek Orthodox is the official religion, representing 98% of the population
Muslim: 1.3%, other 0.7% Body Language Greeks are very demonstrative and affectionate Treatment of Women Very high level of gender equality, though one study suggests that women are still doing the majority of household chores
High gender parity in all levels of educational enrollment
Foreign women often find Greece a good place to do business Literacy 96% literacy rate (age 15+ that can read and write)
Canada has a literacy rate of 99% Education & Skill Level of the Labour Force 9.2% of total government spending goes towards education
Education from age 6 - 15 is mandatory, from 15-18 include vocational training, and is optional, with a 90.2% enrollment rate
Tertiary education includes Universities and technical education institutes Education & Skill Level of the Labour Force (Cont'd) All levels of education have fully-funded public or tuition-funded private options
15% of the total population has a university degree, while the percentage of students that graduate secondary school and attend university has risen by almost 30% since 1995 Health Universal health care
7.4% of GDP
22.5% adult obesity prevalence Business Customs Language Main language: Greek
Primary language for 93%
Many Greeks also understand English, French, and German Top Imports 1) Mineral fuels: $16.7 BN
2) Pharmaceutical products: $4.3 BN
3) Electrical machinery: $4.1 BN
4) Nuclear reactor: $3.3 BN
5) Passenger vehicles: $2.1 BN Top Exports 1) Mineral fuels: $9.6 BN
2) Aluminum and articles: $1.7 BN
3) Electrical machinery: $1.4 BN
4) Nuclear reactor: $3.3 BN
5) Pharmaceutical products: $1.2 BN Trading Partners 1) Germany: $6.4 BN
2) Russia: $5.8 BN
3) Italy: $5.6 BN
4) China: $3.6 BN
5) Netherlands: $3.4 BN Balance of Trade: -$26.8 BN Greece Trade Barriers Tariff barrier: 8-18% value added tax
Greece Corporate Income Tax: 24%
Canada Corporate Income Tax: 17.5%-22% depending on the province
Total tax on profit: 46.4% Total Imports: $57.4 BN Total Exports: $30.5 BN Political Parties Panhellenic Socialist Movement (PASOK, currently in power)
New Democracy Party
Synaspismos-Coalition of the Left and Progress
Democratic Social Movement Greek Contract Law Greece has a statutory legal system
Main source of Greek Contract Law: Greek Civil Code
Formation of Contracts
Essential terms & expressed wish Labour Force Composition
Services - 65%
Industrial - 23%
Agriculture - 12% Compared To Canada
Average UE Rate of 7.5% between 2009 - 2011 Unemployment Rate Religion Pindus Mountains One of these ranges vanishes under the sea but appears again in the east as the mountains of the islands of Crete, Karpathos, and Rhodes Typically Mediterranean Hot, dry summers Mild, rainy winters Small, connects major cities on the mainland, Lines totaling 2,449 kilometers The largest marine merchant in the world and numerous port-cities Fiscal policy guidelines: Historically High Debt and Deficit Levels Established a monetary union
Led to 4% GDP growth between 2003 - 2007 Public sector wages increased
Government spending spree
Generous pension plan Gov't Revenue < Gov't Expenditures Gov't Deficit: <3% only once (2008)
All-time high - 15% (2009) Total Gov't Debt: Never achieved <60% The Aftermath Implemented by the ECB
Reduced deficit to 11% in 2010 & 9% in 2011
2.3% in 2009, 3.5% in 2010 and 6.0% in 2011
Slowed consumer spending
Preventing a quick recovery Economic Contraction Bailouts
Currently at 160% 2010 2011 Total debt - 88% (2011, 16th in the world)
Deficit - 5%
2nd time in 14 years that Canada has reported a deficit Thus, Canada is also feeling financial pressures Represented 20% Market Cap Increases the uncertainty and volatility of the market Positive: Negative: Canada
Commodity prices will decrease
Lost revenue - 0.5% of GDP Japan
Yen is losing buying power to the Euro
May push the country into its own debt crisis 1) Let Greece stay in the Eurozone A 3rd bailout
Austerity flexibility
Longer tenner on current debt Forecasted Recovery:
3 - 4 years Competitive Economy Stop economic contraction
Increase job availability
Increase tourism Lenders would lose money
Borrowers would have to pay more Countries like Portugal, Spain, and Italy may want to leave if their economic conditions do not improve fast enough Economists predict that if the Eurozone does unravel, the financial consequences would likely be greater than the ones produced by Greece alone Borrowing rate declined from 10% to 3% Increased gov't and consumer spending $140 BN $169 BN
50% write off Adopts the Drachma
Depreciates by 30% Questions Non-Trade Barrier: Member of the EU Overview Approximately 20% Islands Three dominating elements: Two main terrorist groups: 1 - 2 years Agenda Population & Culture
Physical Forces
Political & Legal Issues
Balance of Payments
Currency & the Economy
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