Britannia Radio

Central Intelligence Agency

The Work of a Nation. The Center of Intelligence

The truth is that Greece is done for. According to CIA's factbook, Greece's economy is way out of balance. Here are some key figures.

GDP (official exchange rate): $305.4 billion (2010 est.)
Exports: $22.66 billion (2010 est.)
Imports: $60.19 billion (2010 est.)
Current account balance: -$19.89 bn (2010 est.)
Reserves of foreign exchange and gold: $6.37 bn (2010 est.)
Oil - consumption: 371,300 bbl/day (2010 est.)
Budget surplus (+) or deficit (-): -10.4% of GDP (2010 est.)
Debt - external: $583.3 billion (30 June 2011)

https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html

Even if Greece defaults now, it would still need another loan of US dollars to cover its energy bill. In fact, it will need a loan to pay for its food imports as well. As far as I know, Greece is wasting foreign currency on even potatoes and fish from overseas. But let's just focus on the oil bill for now. Greece needs 370 thousand barrels of oil every day and each barrel costs $100. In other words this year Greece's oil bill alone will be around $14bn!

It is easy for somebody from Britain or America to miss the point because his own country never had this problem. Prince al-Sabah from Kuwait and Mr Qasemi from Iran always quote their price in US dollars. They also expect to be paid in US dollars. Even if Greece's treasury were overflowing with euros or drachmas, which it obviously isn't, only American money buys oil.

Since Greece isn't an export driven economy, unlike China, South Korea or Japan, it has no supply of US dollars. Whenever it imports a commodity such as oil, it needs to borrow US dollars. If it defaults, the banks will likely stop lending Greece more US dollars. Then Greece's import bill will have to be cut back to say $10bn from $60bn, so that there is enough money left over to pay for vital imports.

Apart from luxury items such as Scandinavian fish, military equipment, cars, electric and electronic appliances, a country like Greece needs to import industrial machinery such as centre lathes, textile mills, hydraulic presses and industrial robots. If it cannot buy the machinery that is used in factories then it isn't possible for Greece to invest for economic growth.

Turkey has been there. On each occasion, there was a military coup. In the late fifties, a certain Turkish minister had two pens on his desk. When a request for foreign currency allocation landed on his desk, he would sign it with one colour or the other. Requests approved with the correct colour of ink were really authorised, the other requests were turned down by the treasury on grounds that even though they had been signed off by the minister, the funds were unavailable. That's how hard life can be for Greece in the coming years.

I think what the Germans are saying is that from now on they should be the ones who determine which requests for foreign currency are approved and which ones are politely refused. It was to be expected.

EUROPE :: GREECE

PAGE LAST UPDATED ON NOVEMBER 28, 2011

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Introduction ::GREECE

Geography ::GREECE

People and Society ::GREECE

Government ::GREECE

Economy ::GREECE

Economy - overview:

Field info displayed for all countries in alpha order.

Greece has a capitalist economy with the public sector accounting for about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 15% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP. The Greek economy grew by nearly 4.0% per year between 2003 and 2007, due partly to infrastructural spending related to the 2004 Athens Olympic Games, and in part to an increased availability of credit, which has sustained record levels of consumer spending. But the economy went into recession in 2009 as a result of the world financial crisis, tightening credit conditions, and Athens' failure to address a growing budget deficit, which was triggered by falling state revenues, and increased government expenditures. The economy contracted by 2% in 2009, and 4.8% in 2010. Greece violated the EU's Growth and Stability Pact budget deficit criterion of no more than 3% of GDP from 2001 to 2006, but finally met that criterion in 2007-08, before exceeding it again in 2009, with the deficit reaching 15.4% of GDP. Austerity measures reduced the deficit to 10.5% of GDP in 2010. Public debt, inflation, and unemployment are above the euro-zone average while per capita income is below; unemployment rose to 12% in 2010. Eroding public finances, a credibility gap stemming from inaccurate and misreported statistics, and consistent underperformance on following through with reforms prompted major credit rating agencies in late 2009 to downgrade Greece's international debt rating, and has led the country into a financial crisis. Under intense pressure by the EU and international market participants, the government has adopted a medium-term austerity program that includes cutting government spending, reducing the size of the public sector, decreasing tax evasion, reforming the health care and pension systems, and improving competitiveness through structural reforms to the labor and product markets. Athens, however, faces long-term challenges to push through unpopular reforms in the face of often vocal opposition from the country's powerful labor unions and the general public. Greek labor unions are striking over new austerity measures, but the strikes so far have had a limited impact on the government's will to adopt reforms. An uptick in widespread unrest, however, could challenge the government's ability to implement reforms and meet budget targets, and could also lead to rioting or violence. In April 2010 a leading credit agency assigned Greek debt its lowest possible credit rating; in May, the International Monetary Fund and Eurozone governments provided Greece emergency short- and medium-term loans worth $147 billion so that the country could make debt repayments to creditors. In exchange for the largest bailout ever assembled, the government announced combined spending cuts and tax increases totaling $40 billion over three years, on top of the tough austerity measures already taken. Greece, however, struggled to boost revenues and cut spending to meet 2010 targets set by the EU and the IMF, especially after Eurostat - the EU's statistical office - revised upward Greece's deficit and debt numbers for 2009 and 2010. Greece's lenders are calling on Athens to step up efforts in 2011 to increase tax collection, shore up public enterprises, and rein in health spending, and are planning to give Greece more time to repay its EU-IMF loan. Greece responded by introducing major structural reforms, but investors still question whether Greece can sustain fiscal efforts in the face of a bleak economic outlook and public discontent.

GDP (purchasing power parity):

$318.1 billion (2010 est.)

country comparison to the world: 39

$333.2 billion (2009 est.)

$340.1 billion (2008 est.)

note: data are in 2010 US dollars

GDP (official exchange rate):

$305.4 billion (2010 est.)

GDP - real growth rate:

-4.5% (2010 est.)

country comparison to the world: 211

-2% (2009 est.)

1% (2008 est.)

GDP - per capita (PPP):

$29,600 (2010 est.)

country comparison to the world: 47

$31,000 (2009 est.)

$31,700 (2008 est.)

note: data are in 2010 US dollars

GDP - composition by sector:

agriculture: 3.3%

industry: 17.9%

services: 78.8% (2010 est.)

Labor force:

5.013 million (2010 est.)

country comparison to the world: 73

Labor force - by occupation:

agriculture: 12.4%

industry: 22.4%

services: 65.1% (2005 est.)

Unemployment rate:

12.5% (2010 est.)

country comparison to the world: 133

9.4% (2009 est.)

Population below poverty line:

20% (2009 est.)

Household income or consumption by percentage share:

lowest 10%: 2.5%

highest 10%: 26% (2000 est.)

Distribution of family income - Gini index:

33 (2005)

country comparison to the world: 101

35.4 (1998)

Investment (gross fixed):

14.7% of GDP (2010 est.)

country comparison to the world: 166

Budget:

revenues: $119.6 billion

expenditures: $151.5 billion (2010 est.)

Taxes and other revenues:

39.2% of GDP (2010 est.)

country comparison to the world: 47

Budget surplus (+) or deficit (-):

-10.4% of GDP (2010 est.)

country comparison to the world: 197

Public debt:

142.7% of GDP (2010 est.)

country comparison to the world: 4

127.5% of GDP (2009 est.)

Inflation rate (consumer prices):

4.7% (2010 est.)

country comparison to the world: 144

1.2% (2009 est.)

Central bank discount rate:

1.75% (31 December 2010)

country comparison to the world: 114

1.75% (31 December 2009)

note: this is the European Central Bank's rate on the marginal lending facility, which offers overnight credit to banks in the euro area

Commercial bank prime lending rate:

5.984% (31 December 2010 est.)

country comparison to the world: 146

6.055% (31 December 2009 est.)

Stock of narrow money:

$151.1 billion (31 December 2010 est.)

country comparison to the world: 23

$177.8 billion (31 December 2009 est.)

note: see entry for the European Union for money supply in the euro area; the European Central Bank (ECB) controls monetary policy for the 17 members of the Economic and Monetary Union (EMU); individual members of the EMU do not control the quantity of money circulating within their own borders

Stock of broad money:

$316.8 billion (31 December 2010 est.)

country comparison to the world: 27

$379 billion (31 December 2009 est.)

Stock of domestic credit:

$442.8 billion (31 December 2010 est.)

country comparison to the world: 28

$383.7 billion (31 December 2009 est.)

Market value of publicly traded shares:

$72.64 billion (31 December 2010)

country comparison to the world: 52

$54.72 billion (31 December 2009)