In 2014, Greece's debt problems were the biggest financial and economic topic for Europe. It was the subject of a number of crisis summits, all sorts of agreements and aid programs, recalls “Frankfurter Allgemeine Zeitung“ (FAZ). The publication points out that against the background of this background, the development of today's Greece is a real surprise.
Since 2021, Greece's growth indicators have been such that countries like Germany can only dream of something similar. The economic growth of 8.1 percent in 2021 was still explained by the recovery after the shock of the pandemic and the low starting base from which the new development of the Greek economy begins. But in the coming years it continued to grow above the average for Europe: for 2024, a plus of 2.1 percent is expected, while the EU as a whole is likely to achieve only 0.9% growth, and in Germany a minus of about 0.2 percent is even expected, according to the FAC.
What is the reason for Greece's successes?
Politicians, and especially the current government of Prime Minister Kyriakos Mitsotakis, have taken a number of measures that would also be necessary in Germany: the country's administration has been largely digitalized, and in the meantime, ordering a passport online is no longer a problem there. At the same time, the government is using the funds from the European Recovery Fund, with which the EU is supporting the development of European economies after the pandemic, more successfully than in other countries.
„The country is using the money from the fund relatively effectively – "for example, for investments in renewable energy sources," Alexander Kritikos, an expert on Greece from the German Institute for Economic Research, told the FAC.
The better framework conditions have also led to some IT companies settling in Greece. All of this would hardly have been possible if some fundamental changes had not occurred, the German publication commented.
Investor confidence has returned
The country will still have to repay the bailout loans from the crisis times for a long time, but important indicators show that the direction is right. While government debts in large European countries such as France and Italy have recently increased again, Greek debts are decreasing - albeit from a high level. If in 2020 they amounted to almost 210% of GDP, they are now 160%. The higher inflation of recent years has certainly made it easier to cover debts. But more importantly, investor confidence has returned - as can be seen from the yield on ten-year government bonds: Greece currently has to pay investors a marginally lower interest rate on these bonds than France or Italy.
On this occasion, Alexander Kritikos told the FAC: “A new flare-up of the Greek debt crisis, in my opinion, is almost out of the question“. Added to all this are some positive surprises announced at the end of last year by the Greek finance minister. If the debt burden is excluded, the country has reached a budget surplus, and significantly higher than initial expectations. What happened? “The positive development actually illustrates what happens when a country consistently digitizes its tax administration“, commented the FACS.
The Greeks themselves have not yet felt the upswing
Tax evasion has long been a major problem for Greece, while violations are now significantly more difficult. This is one of the main reasons for the increase in state revenues. However, Greece's success should not be exaggerated, the FACS emphasizes. Since even though unemployment at 9.6 percent is much lower than in previous years, the Greeks themselves have so far hardly felt the economic upswing. Wages remain low and have even decreased compared to the level of 2009 - the last before the debt crisis, and inflation remains high. In short: Greeks have become significantly poorer.
Experts like Alexander Kritikos are also concerned that changes in the country's main economic directions have hardly occurred - dependence on tourism is still too high. In addition, the question remains whether Greek politicians will be able to continue the reform process at the same pace, even though Europe is no longer keeping the country under such close scrutiny as it did during the debt crisis.