Essay: Economic Issues Regarding Greece and the Euro Currency Because of Greece's Financial Situation

Pages: 3 (928 words)  ·  Bibliography Sources: 4  ·  Level: College Junior  ·  Topic: Economics  ·  Buy This Paper

Economic issues regarding Greece and the euro currency because of Greeces financial situation.

Economic issues regarding Greece and the euro currency because of Greece's financial situation

With a gross domestic product of $341 billion for 2009, Greece is the 34th largest economy of the globe. The model at the basis of the economy is a capitalism in which 40 per cent of the GDP is generated by the public sector and 15 per cent of the GDP is generated by tourism. Living standards -- given by the income per capita -- in Greece however remain lower in comparison to those in the developed countries of the European Union. Public debt, inflation and unemployment are however above the average in the euro zone.

Up until 2007, Greece had been following an ascendant trend due to increased access to credits, higher consumer spending and improvements in infrastructure. In 2008 however, the country's economic stability and funds decreased due to the internationalized crisis. By 2009, Greece was in economic recession and had accumulated a federal debt of 10.7 per cent of the GDP -- in a context in which the EU had imposed a 3 per cent cap on federal debt. The internal problems, such as decreasing federal funds, inadequate statistical reporting or inability to follow through the reforms set with the European Union, forced international credit rating agencies to downgrade the country's debt rating.

In this context of increasing financial instability, the government in Athens has implemented an austerity program by which it aims to reduce governmental spending and restructure the public sector. The measures have however generated intense populous turmoil and protest and even riots are possible in the country. In support of the country's economic revival, the governments in the euro zone and the International Monetary Fund have "pledged more than $160 billion in support of Greece over the next three years" (Central Intelligence Agency, 2010).

The financial recession in Greece is generally perceived as a powerful international phenomenon, with potential impacts on the near and far global communities. Despite the fact that Greece is a far away country and a small economy (generating only about 2 per cent of the European Union's output), its problems could easily represent the commencement of a greater global financial crisis. Greece represents the model of several modern countries which have increased their foreign borrowings, and despite its size, Greece could also represent the symptom of a greater crisis.

More explicitly, Greece has borrowed immense sums of money to cover its losses. Combined however with the emergent events and the unstable economic climate in the world, the sovereign risk in Greece has exponentially increased. It is in this order of ideas possible for the Greek officials to modify their fiscal policy in a means that decreases the value… [END OF PREVIEW]

Greece's Debt Crisis Causes and Solutions Essay


European Union Economy Issues and Policies Essay


Economic Crisis 2007-2010 Research Paper


Greece Term Paper


Public Relations and the European Constitution for Greece Term Paper


View 50 other related papers  >>

Cite This Essay:

APA Format

Economic Issues Regarding Greece and the Euro Currency Because of Greece's Financial Situation.  (2010, June 23).  Retrieved November 13, 2019, from https://www.essaytown.com/subjects/paper/economic-issues-regarding-greece-euro/286380

MLA Format

"Economic Issues Regarding Greece and the Euro Currency Because of Greece's Financial Situation."  23 June 2010.  Web.  13 November 2019. <https://www.essaytown.com/subjects/paper/economic-issues-regarding-greece-euro/286380>.

Chicago Format

"Economic Issues Regarding Greece and the Euro Currency Because of Greece's Financial Situation."  Essaytown.com.  June 23, 2010.  Accessed November 13, 2019.
https://www.essaytown.com/subjects/paper/economic-issues-regarding-greece-euro/286380.