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The Greek Economy: It’s Just Plain Ugly

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Greece has had to deal with a very uncertain economic outlook over the past decade or so, but now it’s getting downright ugly. Greece owes over $1 billion this month in debt repayments, along with pensions, government salaries and other obligations. They likely don’t have the money.

The rapidly deteriorating Greek economy makes its already daunting debt pile even harder to manage, a key point of contention between Athens and its lenders. The [European Commission’s] latest forecast reckons that Greece’s debt will reach a whopping 180% of GDP this year, much higher than expected in recent months. Greece’s most recent bailout agreement called for its debt-to-GDP ratio to fall to 110% by 2022, which looks nearly impossible without some sort of restructuring, write-down, or default.

The unemployment rate in Greece hovers around 25 percent, which is the highest in the developed world. On top of all this, Greece may lose the support of the International Monetary Fund, which oversees the $172 billion bailout.

Greece is so far off course on its $172bn bailout programme that it faces losing vital International Monetary Fund support unless European lenders write off significant amounts of its sovereign debt, the fund has warned Athens’ eurozone creditors.

The warning, delivered to eurozone finance ministers by Poul Thomsen, head of the IMF’s European department, raises the prospect that it may hold back its portion of a €7.2bn tranche of bailout aid that Greece is desperately attempting to secure to avoid bankruptcy.

According to The Economist, the only bright spot in Greece’s economy is tourism, which seems not to have waned during the financial upheaval. But Greece cannot live on the bread of tourism alone; it will have to get its financial larder in order and soon, or the nation will be very hungry indeed.

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Elise Hilton Communications Specialist at Acton Institute. M.A. in World Religions.

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