Greece Economy: Population, Facts, GDP, Unemployment …

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The continuing lack of economic freedom compounds Greeces worsening competitiveness and political volatility. Bold policy actions are needed to restore fiscal sustainability, enhance labor market flexibility, and tackle systemic corruption.

Major fiscal weaknesses exposed by the debt and employment crisis have not been sufficiently addressed. Unemployment remains high, particularly among young people, and public unions and special interests stifle or delay adjustments to market conditions.

Greece joined NATO in 1952 and the European Union in 1981. It adopted the euro in 2002. Following elections in January 2015, the Coalition of the Radical Left (Syriza) party assumed power on a pledge to end austerity and renegotiate debt repayments. In August, the EU Commission, International Monetary Fund, and European Central Bank agreed to a $95 billion bailout package in exchange for more fiscal and economic reforms and additional austerity. It was the third bailout package in five years. Prime Minister Alexis Tsipras resigned in August after his support in parliament crumbled following his signing of the deal, but he was able to reestablish his coalition following snap elections in September. Greece remains mired in political and economic uncertainty, and its future in the eurozone is uncertain. The economy, which depends on shipping and tourism, fell back into recession in the first quarter of 2015 after a brief upswing. Unemployment is the highest in the eurozone.

Deeply rooted systemic cronyism and corruption, as well as the absence of a strong civil society, lie at the heart of the Greek debt crisis. Both public-sector and private-sector elites are able to plunder the country and their fellow citizens with impunity. Tax evasion is rampant. The judiciary is independent, but protection of property rights is not strongly enforced.

The top personal income tax rate has increased to 42 percent. The top corporate tax rate is 26 percent. The overall tax burden equals about 33.5 percent of GDP. Government spending remains at over 50 percent of GDP, chronic budget deficits continue, and public debt far exceeds the size of the economy. Fiscal stability is highly dependent on eurozone creditors, and structural adjustments have been marginal.

Efforts to enhance the business environment have been sporadic. The process for launching a company is fairly streamlined, but licensing requirements remain time-consuming. With high non-salary costs for employing a worker and rigid restrictions on work hours, the labor market remains stagnant. Resolution of the debt crisis will require privatization of heavily subsidized and loss-making state-owned enterprises.

EU members have a 1 percent average tariff rate. Trade agreements are currently being negotiated with countries that include the United States and Japan. Greece maintains non-tariff barriers to the provision of some professional services by non-EU providers. The financial systems overall stability has been severely undermined, and banking has been under increasing strain.

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Greece Economy: Population, Facts, GDP, Unemployment ...