Despite real GDP growth for 10 quarters in a row, a steady decline in unemployment rates, an improved economic climate and stabilization of fiscal and financial conditions, the effects of the year-long Greek economic crisis are becoming evident in a number of macroeconomic flow and stock variables, as the Eurobank analysis reports.
For example, net equity investments appear negative; the labor force is shrinking; and public debt as a percentage of GDP is still very high. In addition, the volume of per capita domestic economic activity has fallen to rather low levels compared to the European Union comprising of 28 Member States (EU-28). This size reflects to a certain extent Greece’s relative economic position within the EU-28.
According to recent data from the European Statistical Office (Eurostat), in 2018 Greece’s real GDP per capita stood at 68.1% of EU-28, marginally higher compared to 2017. Before 2010 it was slightly fluctuating around an average rate (2003-2009) of 94%. There had been an 8-year convergence period, during which real GDP per capita in Greece increased from 85.6% of the EU-28 in 1995 to 94.0% in 2003. The chronic imbalances of the Greek economy – its known dual deficits in current account balance and general government – have made the aforementioned convergence vulnerable to external disorders.
What does the above-mentioned measure of comparison between the economies of Greece and the EU-28 for 2018 actually mean? The interpretation is as follows: Assuming that on average every EU-28 resident produces (=income) finished goods and services equal to 100 units, then for the average resident in Greece that amount corresponds to 68.1 units. This difference is interpreted by factors such as total productivity of factors of production; per capita natural capital; and the percentage of the employed population as a whole.
Greece ranks 25th among the EU-28 countries, with the economies of Romania (64.8%), Croatia (62.6%) and Bulgaria (50.6%) occupying the last 3 positions. Finally, Spain (90.6%), Cyprus (89.0%) and Portugal (76.0%) are recorded with a higher real GDP per capita compared to Greece.
In the area of real per capita investment, the Greek economy comes last among the EU-28 countries. From 101.7% of the EU-28 in 2008 (mostly housing) an overwhelming shrinkage to 38.1% is recorded in 2018. Meanwhile, real per capita consumption plummeted to 76.3% for the EU-28 in 2018 from 104.4% in 2008. The latest decline can be seen as a measure of the deterioration of the Greek residents’ well-being in the EU-28, though it was partly fueled by the debts. /ibna