Posts Tagged ‘debt crisis’

05.03.2013 Post in World Economy

Greece’s debt crisis was among key factors affecting the euro rate for the last 5 years. It is believed that the governmental debt of the Balkan country shot up in 2008 amid global financial meltdown. In 2009 public borrowing totaled 30% of the country’s GDP while the budget deficit reached 13.6% of GDP, record reading for the Eurozone. Loan agreement which stipulated debt remission and financial package to Greece in return to the implementation of austerity measures was a way out of this situation.

Greek crisis has spooked investors and evoked many tricky questions. Does the euro have a future? Can Greece exit the currency bloc? Will the EU break up? Financial markets were closely watching the unfolding of Greece’s crisis, reflecting investors’ gloomiest outlook. The euro rate has fallen several times amid the news about both high unemployment rate and public debt exceeding GDP.

It took market players 5 years to get used to Greece’s teetering economic situation and eventually investors confided in the seriousness of the IMF’s and ECB’s intentions to provide financial aid to the country despite the Greeks protests.

Nowadays the experts note that the main stage of the crisis is over. However, some headwinds are still remaining and the Balkan economy is still in recession. By 2014, Greece’s GDP is to contract 25% for the years of crisis, Ministry of Finance says. According to optimistic forecasts, budget surplus will make up 0.4% of GDP by 2013.

Meanwhile, other disputable questions, seducing investors’ minds, are on the agenda. Greece’s issue is not relevant any more.