The global economic crisis, which began in 2008, has become especially severe for some countries with problems in the economy. For example, in Europe, Greece was one of the vulnerable states. 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 quite uneven. The successful economies of France and Germany coexist with Greece and Spain, which periodically absorb local crises.
The Greek economy was able to actively develop after entering the euro area. However, this chance was not fully used by her. Through participation in pan-European economic programs, Greece gained access to loans, which the government short-sightedly took advantage of. Government debt increased, but the funds received were spent irrationally, for example, to maintain a significant staff of civil servants.
The public sector in Greece has 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 - private producers often cannot compete fully with the state due to restrictions. Due to loans, both the staff of public servants and their salaries grew. However, this was not accompanied by a real increase in state revenue and labor productivity. Aggravating effect was given by corruption, with which the state could not effectively fight.
To increase its popularity, the government also went 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 replenishment of the budget.
All these negative trends overlapped the global economic herd, which caused, in particular, a decrease in the number of tourists and losses in the sector so significant for the country. Government debt exceeded the country's annual GDP, and the budget deficit increased to 10%. The Greek crisis became a threat even to the euro, as a result of which other EU countries were forced to intervene. Several programs were compiled, according to which the Greek economy should come out of a protracted recession.
