Greece economic problems analysis

The economic environment of Greece is that of a capitalist economy, but with significant public sector contribution – about 40% of total GDP is from government activity. This speaks more to the relatively small size of the Greek private sector than to excessive government ownership of industry. Tourism is one of the major drivers of the Greek economy, accounting for 18% of GDP (CIA World Factbook, 2017). Thus Greece would be characterized as a mixed economy with some government-owned entities. Greece is a member of the EU, but has also received several bailouts in recent years, and struggles with tax collection, and overall economic development. Tax evasion ranges between 6-9% of total GDP in Greece, which makes it a significant economic problem (Georgakopoulos, 2016).

In recent years, Greece\\'s economy has flatlined. The country has received several infusions of capital from other EU countries, but there is a lack of confidence in Greece that is hampered investment at present. The GDP grew 0.4% in 2014, slipped 0.2% in 2015, and was flat in 2016. The country ranks 191st in real GDP growth rate, and 71st in GDP per capita (CIA World Factbook, 2017). Industrial production growth rate is 1.6%, ranking 124th in the world. The unemployment rate is high, at 23.6%, ranking 191st in the world, and that is not even taking into account the number of Greeks who have left the country to work elsewhere in the EU, leaving Greece with a limited-skill workforce, and even those cannot find jobs. There are no real engines of job creation, as the public sector is cutting spending as a consequence of the bailouts. Public sector spending to GDP peaked in 2013 and has declined ever since, though remains at a higher level than pre-crisis levels, because of the lack of GDP growth (Trading Economics, 2017). The lack of economic dynamism has meant that the inflation rate is 0%, and that comes after -1.7% inflation rate in 2015 (CIA World Factbook, 2017).

There are many economic problems facing Greece right now. High unemployment is a serious issue – while the tourism sector still contributes jobs, there is minimal investment in other industries. The government, once a prominent employer, is cutting back on its investment because it has to as terms of the bailouts (Reuters, 2017). That many of the most educated and talented Greek citizens now live and work elsewhere in the EU only makes the problems worse, because they are the ones who theoretically would be the job creators for the country.

The economic crisis came about due to a couple of factors. The aforementioned tax evasion issue remains a persistent problem, hindering the government\\'s ability to increase spending. Moreover, government spending was at high levels, both for wages and defence, but much of that spending came from easy credit, which made the country especially vulnerable to the 2008 downturn (Inman, 2015).

The Greek government has been basically forced to address these problems by the international community. Successive rounds of spending cuts have been mandated. As the country faced a credit crisis, it needed to borrow from international lenders, in particular EU partners, and the conditions of that borrowing stipulated strong cuts to government spending, essentially rolling back a lot of what was given out by the government during the 2000s.

Making matters worse is that the bailouts aren\\'t really working. They were necessary because Greece no longer had access to international bond markets, and the country hopes to regain that access, but at the same time Greece is hoping for debt relief as a way out of its troubles (Bercetche, 2017). Furthermore, some of the main objectives that the EU hoped to achieve with the bailouts have not been met. Banks still have restricted ability to lend, economic growth is still weak, and debt has increased (Dendrinou, 2017).

The bailouts may have brought a temporary end to the debt crisis that Greece faced, but they did not address the structural problems of the Greek economy – the inflexible nature of being on the euro, the tax evasion, and the talent drain that leaves the Greek economy devoid of economic dynamism, reliant on tourism and the government as the drivers of growth.