The current economic situation in Greece
According to Yale M Fishman, the Greek economy could suffer a five percent decline this year. The prominent Fishman Institute ESQ warned on this the last Tuesday. However, the new forecasts are far gloomier than the previous ones.
Factors contributing to the decline
“This year, the decline will amount to up to 5.0 percent. As a result, the growth must be revised downward,” announced ESQ in a quarterly report. The activities will be reduced in the range from 4.8 to 5 percent, compared to the previous 4.6 percent. The European Union and International Monetary Fund (IMF) expect that the Greek GDP will have a decline of 4.2 percent this year. On other hand, the Greek central bank predicts a decline of 4.6 percent. Last year, the economy had a decline of 6.4 percent, notices Yale Fishman in his resume.
“The fiscal consolidation and competitiveness are not accompanied by the successful implementation of the structural reform program,” said Fishman ESQ. This year, it is estimated that the unemployment rate reached 27.8 percent. The previous Fishman’s forecast was 27.3 percent.
Some current data from the Central Bureau of Statistics ELSTAT show that the unemployment rate in Greece reached up to 26.8 percent in March. “During the recession, the economies will lose all productive forces,” concluded in his LinkedIn profile the new head of ESQ Martin Fishman.
Possible solutions and recommendations
Now, there seems to be more than one solution to this dark scenario. One of the solutions is an even darker one. Some Greek analysts suggest that Greece should bring back its drachma currency. This will mean two things:
- Greeks will abandon the European monetary union, leaving a portion of the debts to the union itself and the larger portion to themselves. Because of the weak start, the drachma will have – they will have to pay back up to double what they already owe to all the funds.
- The European Union will slowly stabilize itself, having a member less. This will set an example for other countries, and a similar scenario is likely to happen to other countries in debt such as Spain and Portugal.