The global economic crisis, which began in 2008, has become especially difficult for some countries with economic problems. For example, Greece turned out to be one of the most vulnerable states in Europe. To understand the current situation in this country, you need to know the reasons that caused negative changes in its economy.
Despite the common currency and other elements of economic integration, the development of the Eurozone countries is rather uneven. Successful economies of France and Germany coexist with Greece and Spain, which are periodically absorbed by local crises.
The Greek economy was able to actively develop after joining the euro area. However, this chance was not fully used by her. Due to participation in pan-European economic programs, Greece gained access to loans, which the government of the country used short-sightedly. The public debt was growing, but the funds received were spent irrationally, for example, to maintain a significant state of civil servants.
The public sector in Greece occupies a prominent place in the economy - it produces up to half of the gross domestic product. However, it also slows down the development of the economy in certain areas - because of restrictions, private producers are often unable to fully compete with the state. Due to loans, both the staff of civil servants and their salaries grew. However, this was not accompanied by a real increase in government revenues and labor productivity. An aggravating effect was given by corruption, with which the state could not effectively fight.
To increase its popularity, the government went, among other things, to increase social benefits, such as pensions. It also contributed to the growth of the budget deficit. At the same time, problems with paying taxes increased, which significantly reduced the budget replenishment.
All these negative trends were superimposed on the global economic herd, which caused, in particular, a decrease in the number of tourists and losses in a sector so important for the country. Public debt exceeded the country's annual GDP, and the budget deficit rose to 10%. The Greek crisis has become a threat even for the euro, as a result of which other EU countries were forced to intervene. Several programs have been drawn up, according to which the Greek economy should come out of a protracted recession.
