Greece Market Line

Topics: European Union, Gross domestic product, Government debt Pages: 100 (31449 words) Published: April 11, 2013
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PESTLE Country Analysis Report: Greece © MarketLine. This report is a licensed product and is not to be photocopied PUBLICATION DATE: January 2012 REFERENCE CODE: ML00002-038 WWW.MARKETLINE.COM

ML00002-038/Published 01/2012 Page 1

This profile analyzes the political, economic, social, technological, legal, and environmental (PESTLE) structure in Greece. Each of the PESTLE factors is explored in terms of four parameters: current strengths, current challenges, future prospects, and future risks.

Key findings EU membership provides the needed support to tide over the crisis, however, the sovereign debt crisis is a serious challenge EU membership has proved immensely beneficial for the country even as it struggles with a huge debt burden. Economically stronger EU members such as Germany and France have extended financial support to prevent Greece from defaulting on its debt obligations. Moreover, the economic and political prowess of the EU and the IMF has been leveraged to induce private investors to accept write-downs on loans to the government, thus reducing the government’s debt obligations by 50%. In addition, EU support prevents Greece from isolation in the international arena, which is vital given the current internal discord between the country's government and its public. However, the Greek polity has suffered a serious setback owing to the sovereign debt crisis. The Panhellenic Socialist Movement (PASOK) government was forced to dissolve and concede policy failure, and a new coalition government was put in place. As the debt situation worsened, PASOK – which came into power in 2009 – was crippled by internal discord and opposition from rival parties and the public at large; as a result, its efforts to tackle the crisis were largely piecemeal and unsuccessful. With the new coalition government at the helm, policy paralysis is expected to end. However, many of the policies designed to cut the generous social welfare system have antagonized the public, leading to mass protests and strikes. The situation could get worse as the reforms begin to take effect, causing further deterioration of law and order. The Greek government faces deteriorating finances, but fiscal consolidation measures have been initiated Greece is currently mired in a chronic debt situation owing to the expansionary fiscal policies followed by successive governments. In spite of its integration with the European Union (EU) and its convergence with the terms of the Maastricht Treaty, Greece has continued to exceed the eurozone norms of a 3% of GDP budget deficit and a 60% of GDP external debt. In 2009, public debt was at an all-time high of 129% of GDP. In a bid to improve the situation, Greece has embarked upon a fiscal consolidation policy to reverse its debt path. The medium-term fiscal strategy is an ambitious program designed to reduce the government deficit to below 3% of GDP by 2014 and 1% of GDP by 2015 using a combination of policies targeted at controlling expenditure and increasing revenues. This includes measures such as rationalizing public sector wage bills and downsizing the sector altogether, controlling healthcare and social benefits, and broadening the tax base and cracking down on tax evasion.

PESTLE Country Analysis Report: Greece © MarketLine. This report is a licensed product and is not to be photocopied

ML00002-038/Published 01/2012 Page 2

Healthcare has improved in the country, but high unemployment and an aging population is a cause for concern The performance of healthcare services in Greece has been consistently improving. Total healthcare spending accounted for 10% of GDP in 2009, slightly above the OECD average of 8.9%. According to OECD Health Data (2008), in 2000–07 healthcare spending per capita in Greece increased in real terms by an...
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