Economic and Political Overview

flag Greece Greece: Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response

 

Economic Outline

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Greek economy was estimated to be among the most severely hit by Covid-19 despite the relatively limited number of cases and death rates in the country compared with most of Europe. This was mostly due to Greece's heavy reliance on tourism and the hospitality industry, which not only weighed on the trade and current account balance but also employment and domestic consumption. However, the country’s economy rebounded strongly in the second half of 2021, when real GDP reached its pre-pandemic level. Overall, Greek GDP is estimated to have grown 6.5% in 2021 (IMF), driven by a buoyant domestic demand and a better-than-expected tourist season. The launch of the European Recovery and Resilience Plan and a positive contribution of the external sector should drive a growth of 4.6% this year, followed by 2.6% in 2023 (IMF forecasts).

Government expenses increased drastically in an attempt to fight the COVID-19 pandemic (estimated at 6.5% of GDP). Coupled with a contraction in revenues and the cost of the relief measures taken in response to the extensive forest fires in August, it resulted in a budget deficit of 7.1% in 2021. The general government deficit is expected to decrease to 1.9% of GDP in 2022 thanks to the economic rebound and to the phasing out of the majority of the emergency measures. Public debt – which had been on a downward trend in recent years – skyrocketed by more than 25% of GDP in the aftermath of the pandemic. Despite being among the highest ratios in the world, in 2021 it started decreasing (206.7% of GDP) and is expected to further contract this year and the next (199.4% and 192.4%, respectively - IMF). Despite rising global energy prices, headline inflation remained almost null in 2021 (-0.1%) on account of the weak demand during the first semester of the year. The IMF forecasts a gradual increase over the forecast horizon, at 0.4% this year and 1.1% in 2023.

In 2021, the government's furlough support schemes prevented further job losses; nevertheless, the unemployment rate increased 15.8%, one of the highest levels in Europe. The recovery of the economy is set to accelerate job creation, thus a decrease in unemployment, projected at 14.6% in 2022 and 13.1% the following year (IMF forecast).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 205.35189.26e211.65224.89236.24
GDP (Constant Prices, Annual % Change) 1.9-8.2e6.54.62.6
GDP per Capita (USD) 19,147e17,657e19,82721,15522,314
General Government Balance (in % of GDP) 2.9-3.6e-7.1-1.9-2.6
General Government Gross Debt (in % of GDP) 184.9211.2e206.7199.4192.4
Inflation Rate (%) 0.5-1.3e-0.10.41.1
Unemployment Rate (% of the Labour Force) 17.316.4e15.814.613.1
Current Account (billions USD) -4.58-14.05e-15.68-11.55-11.54
Current Account (in % of GDP) -2.2-7.4e-7.4-5.1-4.9

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

 

Main Sectors of Industry

Traditionally, Greece's economy has been based on agriculture, but nowadays the sector represents only 4.2% of GDP and employs 12% of the labour force (World Bank, latest data available). The country has an agricultural area of around 6,136k hectares and a forest area of 3,901k hectares (FAO). The main crops are tobacco (third largest European producer) and cotton. Olives - many of which are used to produce olive oil - are the country's most renowned export crop. Greece also has an important sheepherding industry and the fishing sector is well developed in the coastal regions.


As a result of the country's diversification of the economy, industry has replaced agriculture as the second source of income after services, accounting for 15% of GDP and employing the same percentage of the labour force. However, its share was higher before the economic crisis of 2007 (above 20%). The main sectors are electronics, transport equipment, clothing manufacturing and construction. Moreover, Greece has the largest maritime fleet in the world.

The service sector accounts for 68.6% of GDP and employs 73% of the labour force. Tourism provides an essential source of income and on its own contributes to almost one-fifth of GDP (the primary sector of contribution to national GDP). The sector directly employs just below 400,000 people, accounting for 10% of total employment in the country (OECD). However, the tourism industry was severely affected by the COVID-19 pandemic, and in 2021 it generated only half of the revenues reached in 2019.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 11.6 15.3 73.1
Value Added (in % of GDP) 4.1 13.9 69.8
Value Added (Annual % Change) -0.3 -2.4 -9.7

Source: World Bank, Latest available data.

 

Find more information about your business sector on our service Market Reports.

Learn more about Market Analyses about Greece on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
60,9/100
World Rank:
96
Regional Rank:
44

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.70/10
World Rank:
42/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Country Risk

See the country risk analysis provided by Coface.

 

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Political Outline

Current Political Leaders
President: Katerina Sakellaropoulou (since 13 March 2020)
Prime Minister: Kyriakos Mitsotakis (since 8 July 2019)
Next Election Dates
Presidential: February 2025
Parliamentary: July 2023
Current Political Context
The pro-business government of Kyriakos Mitsotakis continued to make efforts to improve bureaucracy, while also proceeding to liberalise some of the state-owned institutions in 2021. His centre-right New Democracy Party’s absolute majority in the parliament allows for the swift adoption of policies. The government aims at improving tax collection and expanding the tax base to allow for tax cuts such as a corporate tax rate reduction in 2022.

Diplomatic relations with Turkey have been tense, especially after the discovery of hydrocarbon reserves in the Greek archipelago. Nevertheless, during 2021 the two countries resumed talks on maritime disputes, ending a five-year hiatus.
Main Political Parties
- Coalition of the Radical Left (SYRIZA): left-wing anti-establishment, populist, anti-austerity
- New Democracy (ND): centre-right
- Movement For Change (KINAL): centre-left
- Greek Solution: right-wing, ultranationalist
- European Realistic Disobedience Front (MeRA25): left-wing
- Communist Party of Greece (KKE): Marxist-Leninist
- Panhellenic Socialist Movement (PASOK): centre-left, supports social liberalism
- Independent Greeks (AE): right-wing, anti-immigration, but economically more left and anti-austerity
- Democratic Left (DIMAR): centre-left to left-wing
- Ecologist Greens (OP): green
- Popular Orthodox Rally (LAOS): far-right
- Union Of Centrists (EK): Centrist Opposition
Type of State
Greece, officially known as the Hellenic Republic, is a republic based on a parliamentary democracy. Though a monarchy until 1974, Greece today is a constitutional state.
Executive Power
According to the Constitution, executive power is exercised by the President of the Republic and the Government. The role of the President in the executive branch has been reduced to ceremonial since 1986. The post of Prime Minister, Greece's head of government, belongs to the current leader of the political party that can obtain the confidence of a parliamentary majority. The President of the Republic formally appoints the Prime Minister and, on his or her recommendation, appoints and dismisses the other members of the Cabinet. The Prime Minister exercises vast political power and the amendment of 1986 further strengthened their position to the detriment of the President of the Republic.
Legislative Power
Legislative power is exercised by a 300-member unicameral Parliament. Statutes passed by the Parliament are promulgated by the President of the Republic. Parliamentary elections are held every four years, but the President of the Republic is required to dissolve the Parliament earlier on the proposal of the Cabinet, when faced with a national issue of exceptional importance. The President is also required to dissolve the Parliament earlier than scheduled if the opposition succeeds to pass a motion of no confidence.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
70/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7
Civil Liberties:
2/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
The Greek government provides statistics about the COVID-19 epidemic in the country through the official website Covid19.gov.gr.
For the international outlook you can consult the latest
situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures

To find out about the latest public health situation in Greece and the current sanitary measures in vigour, please consult the dedicated pages on the government’s official website Covid19.gov.gr (in Greek). For further information visit the website of the National Public Health Organization.

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the dedicated pages on the portal of the Greek trade and investment agency Enterprise Greece. The “Guidelines for border management measures to protect health and ensure the availability of goods and essential services” issued by the European Commission can be consulted here. For the updated overview of the introduced trade import and export restrictions and other trade measures (ex. tariffs reductions) due to COVID-19 pandemic, please consult the section dedicated to Greece on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan
For information on the economic recovery scheme put in place by the Greek government to address the impact of the COVID-19 pandemic, refer to the specific pages provided by the official website Covid19.gov.gr (in Greek). Further details can be accessed on the website of the Greek trade and investment agency Enterprise Greece.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the website of the
European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Greek government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Greece in the
IMF’s Policy Tracker platform.
Support plan for businesses

For information on all business and employee support measures put in place by the Greek government to address the impact of the COVID-19 pandemic, refer to the specific pages provided by the official website Covid19.gov.gr (in Greek).
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.

You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

For the updated information on specific programs in support of Greek exporting companies put in place by the national government following the COVID-19 epidemic, if applicable, please consult the website of the Ministry of Finance. The European Commission adopted a Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the State where needed.

 

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Latest Update: May 2022