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Greece exits bailout: Is the Greek economy strong enough?

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Greece exits bailout

Greece will exit its stability program on Monday. How has the Greek economy developed since austerity was imposed in 2010? And is Greece prepared to meet the budgetary targets? A data analysis provides answers.

Greece’s government debt is more than twice the EU28 average; the country’s market value as measured by gross domestic product has decreased by a third since the crisis started; and one in five people are unemployed: At first glance, the situation doesn’t give rise to optimism.

Traditionally, the service sector is the strongest contributor to Greece’s GDP, followed by industry and agriculture. But Greece urgently needs new sources of income to avoid slipping back into recession after the third austerity program ends on August 20. Exports are a promising source of income: Despite some tough years, goods exports rose by 35.5 percent from 2010 to 2017, a welcome relief in Athens and Brussels.

With Greek exports slowly on the rise, the big question remains whether this development is sustainable and strong enough for the country to finance its debt repayments and meet strict commitments for its primary budget surplus. To answer this question, DW analyzed trade data from 2010 to 2018. The investigation shows that the idea of trade as a panacea comes with three caveats.

Caveat 1: Labor costs shrank during the crisis

When the crisis hit hardest in 2010, labor costs were the highest they had been in at least a decade. They dropped markedly from this peak: “The fiscal restructuring that took place as part of the stability program with the EU reduced the cost of labor significantly,” says George Pagoulatos, professor of European politics and economy at the Athens University of Economics and Business.

What turned out to be beneficial for exporters came with a downside: Labor costs measure both wages and taxes paid to the state. Wages have decreased even more than labor costs as a whole, and Greek businesses now pay less for skilled workers.

Erdogan Hints at Executing 13,000, Exits European Human Rights Convention

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wikileaks-turkeyTurkish authorities have arrested more than 13,000 people believed to be tied to the coup attempt and have gutted the country’s civil services sector suspending over 60,000 educators, judges and police.

“‘Why should I keep them and feed them in prisons for years to come?’ – that’s what the people say,” said Erdogan. “The people now have the idea, after so many terrorist incidents, that these terrorists should be killed, that’s where they are, they don’t see any other outcome to it.”

In the wake of the coup, the Erdogan government immediately withdrew from the jurisdiction of the European Court of Human Rights, which bans executions, raising the likelihood of mass executions.

Erdogan’s Turkey now finds itself in a state of disrepair in the wake of a failed coup attempt that left at least 246 dead and more than 2,000 injured as the country’s president called his people to go into the streets and clash with the military forces attempting to overthrow the government. The coup forces, which labelled themselves a Peace Council, opened fire on civilians with helicopters, tanks, and automatic rifles.

Turkish Prime Minister Binali Yildirim said on Saturday authorities had imprisoned over 13,000 people on accusations of treason, including 8,831 soldiers and 2,745 judges – 36% of the entire Turkish judiciary.

“The cleansing is continuing, and we remain very determined,” President Recep Tayyip Erdogan said in a speech late Wednesday describing opposition as a “virus” within the Turkish military and state institutions that had spread like “cancer.”

Many worry that the government’s dragnet has extended well beyond those who could have been connected to the botched coup plot or even sympathizers to the cause in light of President Erdogan’s move in June to pass a constitutional amendment revoking legislative immunity for Kurdish opposition lawmakers from the HDP. Erdogan also successfully pushed to expand the country’s “terrorist” laws to extend to virtually any opposition member deemed by decree. 

Erdogan has proven to have a tenuous grasp of the notion of civil liberties and democracy cracking down with wanton fury against opposition journalists and, in fact, criminalizing nearly all forms of opposition to his government. Still many wonder whether the increasingly autocratic Turkish government is willing to execute thousands which would all but forever exclude the country from the European Union and NATO limiting Erdogan’s level of influence on the international stage.