General economic and financial developments (1981-2012)
| Author | Andersen, Benny |
| Pages | 11-20 |
T H E C R I S I S I N G R E E C E : M I S S T E P S A N D M I S C A L C U L A T I O N S | 11
The underlying economic and financial imbalances and vulnerabilities that led to the crisis
accumulated over several decades, during which Greece did not use EEC, and later euro area,
membership to discipline policies nor fully exploited the potential from the internal market and
substantial EU structural and cohesion funds apart from brief periods, including in the second
half of the 1990s.
Private and public sector structural impediments blocked or delayed progress in various areas.
Many persistent obstacles were rooted in social values that accepted widespread corruption
and tax evasion, a heavy bureaucracy, and government susceptibility to granting favours to
privileged groups. An effective, sustained change of social values, and an end to stop-go policies
closely related to the political economy aspects of the post-military junta period, were vital to
avoid a crisis. When that proved impossible, it led to
restructuring in March 2012.
Greece has a history of heavy state involvement in the economy and problems in servicing public
debt. Before this crisis it had defaulted on or rescheduled debt five times and lived in a state of
default for more than a hundred years combined since 1800 (Reinhart and Rogoff, 2009). A
closer look at developments in some important time periods will cast more light on the long,
rough road to the latest crisis and debt restructuring.
Table 1
Comparative economic performance of Greece (selected periods 19812012)
(Annual averages)
19811993
19942000
20012009
20102012
GDP growth
Greece
0.7
3.2
2.6
-7.3
Ireland
2.8
9.1
3.1
0.8
Portugal
3.4
3.5
0.6
-1.3
EU/euro area
1.9
2.9
1.1
1.0
Consumer price inflation
Greece
18.5
6.1
3.3
3.0
Ireland
6.6
2.6
2.7
0.5
Portugal
15.4
3.0
2.6
2.6
EU/euro area
11.3
5.3
2.1
2.3
Unemployment rate
Greece
6.8
10.7
9.6
18.3
Ireland
14.9
9.8
5.8
15.2
Portugal
6.4
5.8
6.9
13.0
EU/euro area
9.1
10.0
8.6
10.6
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