Financial Crisis:

Greece
By: Hong Lai
Sylvia Zheng

Discussion Topics
Background Information
Greeces Imports and Exports
Causes of Financial Crisis
Financial Crisis in Greece
How Greece Financial Crisis Affect Other Countries
Solutions

Background Information
Greece, a Parliamentary Republic
Prime Minister, George Papandreou
Capitalist economy with the public sector
accounting for about 40% of GDP
Member of EU
Greece joined in 1981
In 2001, 12th member of the European
Economic and Monetary Union

Greeces Imports and Exports

Greece imports twice as much as they export
Greece Total Trading
( from 2009-2010 )

in billion of US $

$80$64
$60
$40
$21
$20
$$(20)
$(43)
$(40)
$(60)
2009

$45
$21
$(24)

2010

Greece Trading from Year 2009-2010

Greece total Exports

Greece total Imports
Trade Balance

Greeces Imports and Exports

Exports(2009 estimated)-$21.37 billion
Manufactured goods, food and beverages, petroleum products,
cement, chemicals
Majormarkets: Germany, Italy, Bulgaria, U.S., U.K., Romania
Imports(2009 estimated)-$64.27 billion
Food and animals, crude oil, chemicals, machinery, transport
equipments
Majorsuppliers: Germany, Italy, France, Netherlands, Russia
Tourism is the main income for Greece
Provided 15% of GDP

Causes of Financial Crisis

Greece GDP (Real Growth Rate)
3%
2% 2%
1%
0%

2008

2009

2010

Annual GDP Growth (in %) -1%

-2%

-2%

-3%
-4%
-5%

-4%

Greece GDP

Causes of Financial Crisis

Public debt:
126.8% of GDP (2009) increased
to 144% of GDP (2010)
Inflation:
1.2% (2009) increased to 4.5%
(2010)
Unemployment rate:
9.4% (2009) increased
to 12% (2010)
Current Account Balance:
-$34.43 billion (2009) to
-$17.1 billion (2010)

Financial Crisis in Greece

Government overspending with its national debt
is $413.6 billion

Paying out salaries on the government dime, with huge

holiday bonuses
Employees were paid a 14-month year instead of 12 months
Also, the extra money gave many Greeks in their early
retirement

One of the worst countries with debt in Europe

National debt, at 300 billion (aka $413.6 billion), is larger

than the country's economy
Prediction estimated that the national debt will reach 120%
of GDP in 2010
The country's deficit is 12.7% of its national economy

Probability of Countries Being

Unable to Pay Back Debt

How Greece Financial Crisis Affect Other

Countries
Contagion
If Greece is not helped, it could drag down the entire
European Union
Threatening economies: Portugal, Spain and Italy

The impact on the common European currency

15 other euro zone economies who have agreed to help out
Greece
IMF announced a bail-out package 95 billion ( $146.2 billion)

An Explanation of Greeces
Financial Crisis Video

Solutions
What Greece implemented
Raise taxes on fuel, tobacco, and alcohol
Raise the retirement age by 2 years
Decrease government spending
Recommendation
Sterilization
1. Decrease Unemployment
2. Fix Inflation Rates ?

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