Text: Žikica Milošević
After many unwanted years of slow and fast decline, there is hope on the horizon. Greeks are slowly recovering from their crisis, though they are a long way from former glory.
During the Interwar period, the German people used to mock their Eastern neighbour by saying “it’s as bad as the Polish economy”. We used to use a similar phrase for those who were deeply in debt, and it seems that the Ottoman occupation has left some deep traces in the development of the Greek economy.
DEBT LIKE GREEK
From the glorious times of the Eastern Roman Empire, i.e. Byzantine glory, things were not good during the period of Turkish rule. Let us just remind you that the Turks banned wine production and destroyed vineyards, since the consumption of alcohol was against Sharia law. With many families having lived from that source of income, the Greek economy was left crippled. However, luckily, Sharia had nothing against olives and olive oil, so olive groves remained.
The real economic strength of Greece, however, was in shipping. Their merchant fleet was, and remains, so strong that it still accounts for 70% of the EU fleet. And the Greeks have always been orientated towards the sea. No wonder, given the length of their coastline and the fact the country has (really) zero navigable rivers! So, they have the sea. Even in ancient times they were a great superpower, forming many overseas colonies across the Mediterranean – from Russia and Georgia to France. No wonder they can still dictate things. It is well documented, and some recent research works suggest that, by calculating the average rate of per capita GDP growth between 1833 and 1911, it was only slightly lower than that of modern Western European nations. Industrial activity, (including heavy industry like shipbuilding) was evident, mainly in Ermoupolis and Piraeus. The troubles? Well, there were some. My grandfather was right in his figure of speech. Nonetheless, Greece faced economic hardship and defaulted on its external loans in 1826, 1843, 1860 and 1893. The Simpsons joked that “the EU put Greece on sale on eBay”, as it is a bankrupt asset, but after bringing Syriza and Golden Dawn into the limelight, and following fights between the notorious Schaeuble and the charismatic Varoufakis, it all seems to be less traumatic now, at least in relation to new troubles like Brexit. Or is it?
SOME FACTS LESS GRIM THAN EXPECTED
In actuality, the economy of Greece is the world’s 47th largest, with nominal annual GDP of $194.559 billion. It is also the world’s 55th largest economy in terms of purchasing power parity, at $287.830 billion annually. As of 2016, Greece is the 16th largest economy in the 28-member European Union. Greece is ranked 38th and 47th worldwide, at $17,901 and $26,669 respectively for nominal GDP per capita and purchasing power parity per capita. That result is not that good for an EU member, but isn’t that bad either. If we’ve had enough of facts and figures, we can proceed to the big ‘Why?’.
The problem is as follows: Greece is a developed country, but its economy is based almost entirely on services (82.8%), while the less developed industrial sectors contribute a mere 13.3%. Of course, this makes the country vulnerable to every tremor. The migrant crisis was one of them, regardless of the economic crisis beginning in 2008. If you are heavily reliant on tourism and some islands, like Lesbos and Kos, become giant refugee camps, that cannot be helpful. If you are prone to strikes aimed at stopping the government from implementing cuts, that also tends to prompt tourists to turn to some more predictable destinations. But someone’s loss is someone else’s gain. The instability of the Middle East, coupled with the unpredictable situation following attacks in Barcelona and especially Egypt, Tunisia, Turkey and other countries, has rendered Greece some kind of safe haven. As such, the tourism industry has bounced back and filled coffers. With 18 million international tourists in 2013, Greece was the EU’s 7th most visited country and the world’s 16th that year, and now the situation is even better.
A negative factor is Greece’s heavy dependence on food imports, with the agricultural sector contributing a mere 3.9% to national economic output in 2015. The good news is that the world is always going to need ships. Increased demand for international maritime transportation between Greece and Asia has resulted in unprecedented investments in the shipping industry. The Greeks have so far refrained from reintroducing the drachma currency, defaulting or initiating a so-called Grexit, in agreement with the Troika, so although nothing has been resolved as yet, it does seem that some drastic solutions will not be on the table. A slow recovery is more plausible.