Semester Project Overview Greece By Gibran Haq Week 1 Economic Factors Greece experienced financial turmoil in 2010 High structural deficits an already suffering debtto GDP level and structural weaknesses within the Greek economy led to what is considered the Greek Depression The current GDP of Greece in billions of dollars is 241 72 with a growth rate of 0 2 percent in 2011 Greece currently has a 2 percent inflation rate and a terribly high unemployment rate of 26 8 percent Greece s long term unemployment rate is also high at 19 5 percent showing that the recession is not ending soon The youth unemployment rate is 57 7 percent as of Jan 2014 a large climb from 30 percent in 2010 Greece has a very large debt to GDP ratio of 175 percent with an external debt alone of 416 971 000 000 euros Essentially GDP 241 72 billion dollars GDP Growth rate 0 2 percent Inflation rate 2 percent Unemployment rate 26 8 percent Long term unemployment rate 19 5 percent Youth unemployment rate 57 7 percent Debt to GDP ratio 175 percent External Debt 416 971 in millions of Euros Greece is clearly in the trough of the business cycle also known as a recession The GDP of the country has fallen considerably since 2010 after a massive boom However the GDP growth rate is small but still positive This indicates that while Greece is currently in a recession it is beginning to inch its way up the cycle and towards the positive portion of the trough A graph of growth rates clearly demonstrates downward spiral since 2010 We can see negative inflation rates since 2010 as well indicating a period of deflation This is the result of a lack of spending in the economy due to the recession As the demand decreased and excess of supply emerged This should hopefully lead to a drop in prices overall Unemployment another huge factor of recession times has been increasing rapidly since 2010 The unemployment rate first graph currently stands at about 26 8 percent with the youth unemployment rate second graph at 57 7 percent since 2010 Greeks Debt to GDP ratio has also been increasing since 2010 This is probably the best indicator of Greeks emergence from the recession as it shows just how much the country is growing versus how much it still owes One can obviously not expect a value of zero but such a large percentage is troubling as it will become more and more difficult to pay off debts Lastly we can look at Greece s external debt Due in part to an approximate 110 billion euro bailout by the International Monetary Fund IMF Greece currently owes about 416 971 000 000 The debt spike reached its peak around January of 2010 and has wavered there since then Week 2 Leading Economic Indicators One prominent result of a recession is decreased lending in the private sector The following graph shows a decline in this lending since 2010 as well as the boom in lending leading up to 2010 that assisted in the recession s beginnings Naturally consumers are largely effected by a recession Generally a decline in consumer spending is seen which in turn also leads to the negative inflation rate we observe during a recession The following graph shows this decline post 2010 Capacity utilization is another indicator of economic flux This statistic shows the percentage utilization of the total capacity of an economy to produce As one would expect an economy in recession would not be operating at high capacity Also note a capacity utilization of 100 is an idealistic goal It is interesting to see that while the value did drop significantly in January 2012 there has been a rise This as well as a positive GDP growth rate of 0 2 percent shows that the Greek economy is potentially beginning its rise from recession Week 3 Final Variable Selection GDP Growth rate Inflation rate Unemployment rate Capacity utilization Consumer Spending These five variables in my opinion sum up the Current state of Greece We can see a growth rate of 0 2 percent This was preceded by severe drops in GDP and sharp rises in debt to GDP The inflation rate is currently negative at 2 0 percent The lead up to a recession was marked by positive inflation and this negative value shows us that Greece is now on the other side of that boom Unemployment rate is the greatest indicator of the fact that Greece is near the bottom of the trough Steadily rising since even before 2010 and currently at nearly 30 percent the unemployment rate is one of the largest factors indicators of a recession Consumer spending plays a huge role in an economy Naturally consumers will spend less and hold onto their money when they feel it is worth less Both consumer spending and consumer confidence in their economy have seen sharp declines since 2010 However confidence has risen slightly in recent past showing us that consumers will eventually start spending more Greece s capacity utilization has also seen a downward trend since before 2010 Only in the last few months has the country seen a small increase showing us that while Greece is at a low point there is potential for it to grow once more In summation Greece hit rock bottom The decline started in 2010 and lasted till around Jan 2014 After this point increases in certain key indicators show us that there is the possibility of emergence Bailouts from the IMF and assistance from foreign countries played pivotal roles in this rise from the trough While it is estimated that 2014 will be the last year of true recession it is hard to say whether it really is time for Greece s cycle to start anew Sources http www investopedia com articles 05 010604 asp http www tradingeconomics com http www tradingeconomics com greece government debt to gdp http www theguardian com business 2013 dec 30 greece leave bailout scheme 2014 http www imf org external country grc