A Study On The Economy Of Greece Economics Essay

By July 11, 2017 Economics

Macro-economic which is a survey about the whole state ‘s economic includes GDP ( Gross Domestic Product ) , supply – demand, employment, rising prices, economic growing and exchange rate. The combination of all the single market activities ( the investing in the private and public sector ) works together and creates the national economic.

We have chosen the state Greece to research and survey about those basic jobs which are involved to the touristry and cordial reception industry. By and large talking, the survey of Greece ‘s macro-economic will assist us understand more how the national economic, touristry and cordial reception industry and our hotel are related and affected each other. First of wholly, we would wish to present overall Greece ‘s history ( history, political, population, geographics, etc ) . Then we take the chief portion to research Greece ‘s the national economic issues ( GDP, employment, rising prices, and currency ) , the PESTLE ( Political, Social, Technology, Legal and Environment ) . Then secondly, we study about the whole touristry and cordial reception industry of Greece and SWOT. This portion will state about how the authorities ‘s engagement in touristry and explains how the soon macro-economic issues affect to this industry. The last but non least, we will give out the advantages and disadvantages ‘ the Greece ‘s macro-economic and conclude that it is appropriate for puting and runing our concern hotel or non, and in conclusion how the macro-economic will impact to our hotel ‘s undertaking in the hereafter.

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In drumhead, we will take the decision to give out our eventually determination of investing into Greece or non. The aim of the undertaking is to analyse the “ macroeconomics ” environment and explicate a recommendation to put or non in the development of Accord Hotel Chain in the state Greece in the 15-year long-run investing.


Greece is a state in southeasterly Europe and with the population 11,295,002 people ( 2010 estimation ) which is stood 74th in the universe. Its largest metropolis is Athens as a capital. The entire country of Greece is 131,990 km2 which is stood 96th in the universe. It has land boundary lines with Albania, the Republic of Macedonia and Bulgaria to the North, and Turkey to the E. There are besides seas screen about around lands of Greece such as Aegean Sea, Ionian Sea and Mediterranean Sea. Greece has the 10th longest coastline all over the universe at 14,880 kilometer ( 9,246 foot ) in length and having a immense figure of islands. There are some Cultural groups like Greek with a major group ( 93.8 % ) , so the Albanian group ( 4.3 % ) and the others ( 1.9 % ) . In 1829, Greece achieved independency from the Ottoman Empire. From the 2nd half of the nineteenth century and the first half of the twentieth century, Greece added adjacent islands and districts measure by measure and most of population is talking Greek as an official linguistic communication. In the World War II, it was the first invaded by Italy ( 1940 ) and later occupied by Germany ( 1941-1944 ) . After that, Greece became a member of NATO in 1952 and joined the EC ( now is EU ) in 1981 ; it became the 12th member of the European Economic and Monetary Union in 2001. “ In 2010, the chance of a Grecian default on its euro-denominated debt created terrible strains within the EMU and raised the inquiry of whether a member state might voluntarily go forth the common currency or be removed. ” ( Greece, 2010 )

The Government

The Political System

Greece is known as a state of parliamentary Republic which is based on the legislative, executive and judicial power. And in the Republic of Greece, the fundamental law is the highest jurisprudence.

The President

“ The President ‘s Republic of Greece who strongly has authorization and controls the maps of the power of the State is soon Karolos Papoulias ” ( CIA ) . He was elected by Parliamentary for a term of five old ages and his office is contrary with any other office, place or map. To go a president, the individual must be elected and should have a two-thirds bulk of the entire figure of members of Parliament. He selects and assigns magisterially the Prime Minister, and he can urge and name the remainder of the members of the Government and the Duty Ministers. ( Greece, 2010 )


“ The authorities includes the Cabinet which comprises the Prime Minister and Minister. Harmonizing to the commissariats of the fundamental law and Torahs, the authorities determines and directs the general policy of the State ” . ( CIA )

Foreigner Relationss:

“ Greece has become a member of few international organisations such as the United Nations and the International Bank for Reconstruction and Development ( known as World Bank ) , the International Monetary Fund ( IMF ) , the World Trade Organization, and the Organization for Economic Cooperation and Development. Furthermore, Greece is besides a member of the European Union ( EU ) , the North Atlantic Treaty Organization ( NATO ) ” . ( Central Intelligence Agency )

Economic background

This survey looks into the factors that explain the macro-economy of Greece by making a deep research. The intent of this research is to take a expression and analyse the current state of affairs and compare how it is these yearss, while economic crisis and besides to contrast with other states. Traveling back to the yesteryear in 1829, Greece achieved independency from the Ottoman Empire. The economic system of Greece is the 27th largest economic system in the universe by nominal gross domestic merchandise ( GDP ) and the 33rd largest by buying power para, harmonizing to the papers given by the International Monetary Fund for the twelvemonth 2008. It is besides a developed economic system because of the 22nd highest criterion of life in the universe. Besides that, the populace sector accounts about 40 % of GDP with per capita GDP about two-thirds that of the taking euro-zone economic systems. The service sector contributes 75.8 % of the entire GDP, industry 20.8 % and agribusiness 3.4 % . On the same manus, touristry provides 15 % of GDP Greece is the 24th most globalized state in the universe and is classified as a high income economic system and is besides a major donee of EU assistance ( about 3.3 % of one-year GDP ) . After that, Greece joined the EC ( now the EU ) in 1981 and it became the 12th member of the European Economic and Monetary Union in 2001. This connection helped the Greece economic system grew about 4 % per twelvemonth ( between 2003 and 2007 ) due in portion to substructure disbursals in the 2004 Athens Olympic Games. However, its growing decreased to 2 % in 2008 and so the economic system went down in 2009 and constricted by 2 % , harmonizing to the universe fiscal crisis, cut downing recognition conditions, and the failure of Greece to work out the turning budget shortage, which was actuated by cut downing authorities ‘s grosss, and increased authorities outgos ( The universe factbook – Greece, 2010 ) . At the same clip, the exports were $ 18.64 billion ( 2009 ) with the export goods such as nutrient and drinks, manufactured goods, crude oil merchandises, chemicals and fabrics. Harmonizing to the research in 2008, the chief export spouses were Italy ( 11.5 % ) , Germany ( 10.5 % ) , Bulgaria ( 7.1 % ) , Cyprus ( 6.2 % ) , US ( 5 % ) , UK ( 4.7 % ) , Romania ( 4.4 % ) . While the imports were $ 61.47 billion ( 2009 ) with import goods like machinery, conveyance equipment, fuels and chemicals. Through the research in 2008, the first chief import spouse was Germany ( 12.1 % ) , so was Italy ( 11.7 % ) , Russia ( 7.4 % ) , China ( 5.6 % ) , France ( 5.1 % ) and the last spouse was Netherlands with 4.7 % . From above informations it is really clear that the gross external debt was $ 552.8 billion harmonizing to statistic on 30 June 2009. In add-on, the public debt, rising prices and unemployment are exceeded the euro zone norm while per capita income is low, the debt and unemployment in 2009 increased while rising prices decreased. The disbursal of public fundss was high and it has led the state into a fiscal crisis. Under powerful force per unit area by the EU and international market participants, the authorities has used a plan that comprises cutting authorities disbursals, diminishing the size of the populace sector, cut downing revenue enhancement slip, altering the wellness attention and allowance systems, and bettering fight through alterations in construction to the employment and merchandise markets. However, Greece still faces with long-run challenges to force through unusual reforms. “ In April 2010 a taking recognition bureau assigned Greece debt its lowest possible recognition evaluation, the International Monetary Fund and Euro zone authoritiess provided Greece exigency short and medium-term loans deserving $ 147 billion in May so that the state could do debt refunds to creditors. In exchange for the largest bailout of all time assembled, the authorities announced combined disbursement cuts and revenue enhancement additions numbering $ 40 billion over three old ages, on top of the tough asceticism steps already taken. ” ( Greece- economic system overview, 2010 )

Greece ‘s General Macro-economic Overview

GDP ( buying power para ) : $ 332.9 billion ( 2009 )

GDP ( official exchange rate ) : $ 330.8 billion ( 2009 )

GDP- existent growing rate: -2 % ( 2009 )

GDP-per capita: $ 31,000 ( 2009 )

Labor force: 4.98 million ( 2009 )

Labor force -by business:

Agribusiness: 12.4 %

Industry: 22.4 %

Servicess: 65.1 % ( 2005 )

Unemployment rate: 11.6 % ( June 2010 )

Household income or ingestion by per centum portion:

Lowest 10 % : 2.5 %

Highest 10 % : 26 % ( 2000 )

Inflation: 4.2 % ( 2008 ) , 1.4 % ( 2009 ) , 4.9 % ( November, 2010 )

Investing ( gross fixed ) : 16.8 % of GDP ( 2009 )

Industries: touristry, nutrient and baccy processing, fabrics, chemicals, metal merchandises ; excavation, crude oil.

Currency ( exchange rate )

Euros ( EUR ) per US dollar – 0.7338 ( 2009 ) , 0.6827 ( 2008 ) , 0.7345 ( 2007 ) , 0.7964 ( 2006 ) , 0.8041 ( 2005 )

GREECE CURRENCY: ( Money Greece )

There are no limitations on the import or export of local or foreign currency. However, when people travel from or to a state outside the European Union and carry the sums over a‚¬ 10,000 or tantamount, it must be declared.

Euro ( EUR ; symbol a‚¬ ) = 100 cents. Notes are in denominations of a‚¬ 500, 200, 100, 50, 20, 10 and 5. Coins are in denominations of a‚¬2, 1 and 50, 20, 10, 5, 2 and 1 cents.

PESTLE Analysis

Greece ‘s Political overview

“ Greece has a presidential parliamentary system and is governed under the fundamental law of 1975. There are 300 members of unicameral parliament, which will elect a president for a five-year term ” . ( CIA )

On February 3, 2010, Greek President Karolos Papoulias was re-elected to a 2nd term in an internal ballot in parliament. ( gfmag )

Political parties: ( CIA )

In Greece, there are four political parties include:

Pan-hellenic Socialist Movement ( PASOK )

New Democracy Party

Synaspismos-Coalition of the left & A ; Progress

Democratic Social Movement

Greece ‘s Economic overview

Greece which has been accepted to be a member of the European Community ( EU ) in 1981 and jointed the MU ( Monetary Union ) in 2001 is seemed as one of the smallest economic of European ‘s economic country. On January 2002, Greece adopted and started utilizing the EURO as a new common currency. Equally shortly as going a portion of EU, Greece reached to the low-cost recognition which pushed the domestic demand up, and made it as the strong BASIC for economic growing averaging about 4 % in recent twelvemonth. At the same clip, the financial policies besides supported the economic growing by cutting revenue enhancements and increasing the disbursement on rewards and entitlements declining the financial balance. In add-on, the reflecting the limited supply capacity and inflexiblenesss in the domestic economic, rising prices and labor-cost growing in Greece went over its trading spouses and gnawing the fight. “ This was the major ground and deepest-rooted exposures has begun from Greece and entered the planetary economic crisis ” . ( wttc )

Greece Economic Structure

All the sectors in Greece, the service sector leads the manner both in delivery towards the GDP every bit good as employment. “ Public sector besides earns with about 40 % of the national GDP. Tourism is another changeless and dependable subscriber, with 15 % portion of the GDP ” .A ( gfmag )

However, from the 2007-2009 fiscal recession, the Greece disposal has been concentrated on implementing strictness steps that include cut downing down authorities disbursals, the size of public sector and reorganising the pension sector to do faster recovery and seeking to cut down public debt which has grown bigger than the GDP. “ Harmonizing to the 2009 informations, public debt is every bit high as 108.1 % of the state ‘s GDP ” . ( gfmag )

Greece Economic Structure: Primary Sector

The primary sector of Greece is said excessively much as the service sector. With touristry right at the controls the service sector has went over all other sectors in footings of part to the GDP. “ Harmonizing to the 2009 informations, Greece service sector has contributed about 75.8 % to the national GDP and provided 65.1 % of occupation for work force. Service sector includes professions, such as street sellers, hotel and housing industry, public disposal and telecommunications ” . ( wttc )

Greece Economic Structure: Secondary Sector

The industry sector has been conveying about 20.8 % of the national GDP and engaging 22.4 % of work force. In Greece, Athens is the lone metropolis with the highest concentration of industries. The grounds show a difference from connectivity to ease of transit. The different Greece industries contain excavation, crude oil, nutrient and baccy processing, metal merchandises, fabrics and chemicals.

Greece Economic Structure: Third Sector

The agribusiness sector earned about 3.4 % into the GDP and pulled up 12.4 % of the state ‘s work force ( gfmag ) . However, because of the deficiency of natural resources and arable land, Greece is non able to turn its measure of production well. The chief agricultural merchandises are wheat, barley, sugar Beta vulgariss, maize, vino, baccy, olives, tomatoes, murphies ; beef and dairy merchandises. Beside all agricultural merchandises and fruits, olive oil is besides the top have contributed merchandises to national export.

On the other manus, there is a distressing thing for all sectors are the significantly increasing unemployment, which harmonizing to the 2009 information, stands at 8.9 % . Even more distressing are the least investings. In 2009, the investings were measured to be every bit low as 15.6 % of the GDP. ( gfmag )

Why was Greece in the economic crisis?

For old ages ago, Greece has been spent a batch of money while it did n’t hold. So that, the authorities has taken the advantage of the economic at the good clip to borrow money and spent it on pay-rise for public sector and undertakings such as the 2004 Olympic. Due to those grounds, it began to roll up bigger and bigger shortage ( the spread means the distance between how much a state collect from revenue enhancement, and what it spends ) .

When the universe economic went bad, Greece faced and suffered the debt and was unable to pay back. At this clip, Bankss started to see Greece as a state which can non to be able to pull off its money. This led to ensue is they worried Greece can finally neglect in paying its loans, and even in worse instance traveling to ruin. Besides that, Bankss gave out solutions to cover the hazard such as they decided to bear down Greece to borrow hard currency and this made the state of affairs of Greece more severely and worse. Finally, the authorities that went to looking for the aid from other European states such as Greece borrowed 110 billion Euros from other EU states and IMF ( International Monetary Fund ) on May 2010. Harmonizing to the information of Financial Minister of Greece, the state debt which is at 300 billion Euros ( $ 413.6 billion ) is bigger than the state ‘s economic system. With this sum of this debt, it is estimated foretelling that will make 120 % of ( GDP ) Gross Domestic Product in 2010. That money was loaned at a much better rate ; nevertheless it has come with slippery conditions. Such as in 2010, the authorities has started to cut down disbursement and enforced stringency steps which are aimed to cut down the shortage by more than 10 billion Euros ( $ 13.7 billion ) . This action purposed to bear down revenue enhancements on fuel, baccy and intoxicant ; increased the retirement age by two old ages ; forced public sector wage cuts and applied tough new revenue enhancement equivocation. Otherwise, harmonizing to Greece ‘s national statistics office, the Greece economic psychiatrists 1.8 % as consumer cut down disbursement and private ingestion dropped 4.2 % year-on-year.

After authorities has taken actions of deciding the fiscal crisis, it is those cuts that have led to the public violences in Athens. There has been warning of opposition from assorted sectors of society. “ This was illustrated that workers inside state have stroked shutting airdromes, authorities office, tribunals and schools. Greece ‘s recognition evaluation – the appraisal of its ability to refund its debts – has been downgraded to the lowest in the Eurozone which means that it is likely viewed as a fiscal black hole by foreign investors. This leaves the state Greece to be nerve-racking for paying its measures as involvement rates on bing debts rise ” . ( nationsencyclopedia )

European shortage and debt degrees 2009

Deficit ( % of GDP )

Debt ( % of GDP )

Beginning: EUROSTAT




Irish republic



United kingdom






Portuguese republic






Greece ‘s Social Overview

Social issues


Greece is known as a hamlet of international narcotics sell-buy activity. It takes topographic point as a impermanent finish for hemp and diacetylmorphine from the Middle East and Southwest Asia edge for finishs in the West, every bit good as precursor chemicals going east. It is besides a hot point and a concluding finish for South American cocaine. Drug trafficking has taken a portion to lend to the growing of another illicit industry in Greece: money laundering. Outside of narcotics related condemnable activity, larceny is reasonably prevailing in Greece, peculiarly in countries frequented by tourers.


“ The Revolutionary People ‘s Struggle ( ELA ) and the Revolutionary Organization 17 November ( 17N ) , were established and appeared in the seventiess with the rule aim of get the better ofing the opinion Grecian military by utilizing a run of force. Both organisations developed a unquestionably anti-Western set, adopting resistance to Greece ‘s engagement in the North American Treaty Alliance ( NATO ) and subsequently, its rank to the European Union, every bit good as naming for the remotion of United States military bases in Greece ‘ ( CIA ) .


The menace of terrorist force is seemed to be from domestic instead than foreign states. As similar with the insurgences above, the Revolution people ‘s Struggle ( ELA ) and the Revolution Organization 17N which are seemed as terrorist act organisations. They can menace the peace of EU group in peculiar and the universe in general.

Greece ‘s Science and Technology Overview

Although Greece has a batch of jobs about security, fiscal crisis state of affairs but it has a good advantage which is the strategic location, qualified work force, and many transnational companies for illustration Ericsson, Siemens, SAP, Motorola, and Coca-Cola which have their ain regional R & A ; D Headquarter in Greece..

Greece ‘s Legal Overview

Fundamental law

“ Greece adopted a new fundamental law on June 11, 1975, as portion of a return to independent rules following the terminal of the military government of 1967-1974. The new fundamental law was established in Greece as a Parliamentary democracy with a weak president functioning as caput of province. While the fundamental law distinguishes and recognizes spiritual freedom, Orthodox Christianity is recognized as the “ prevalent faith in Greece, ” and the Grecian Orthodox Church enjoys particular constitutional protection ” ( CIA ) .

Legislative Authority

“ Legislative authorization is granted power in a unicameral parliament, the “ Vouli ton Ellinon, ” presently is included of about 300 members elected for maximal four-year footings ” ( CIA ) . The parliament will elect the president by a two-thirds greater portion of all members. “ If after two efforts, no campaigner for president obtains the needed bulk so the parliament may elect a president by a three-fifths bulk of the members voting ” ( CIA ) .

Greece ‘s Environment Overview

Environment issues

Acid rain is non merely a well-known issue in the universe, but it is besides the of import issue which has been taking topographic point in Greece. Acid rain is seemed as a serious issue in Greece because it affects both agriculture facets of the environment, and Greece ‘s lakes and Greece people.

Besides acerb rain, there are assorted environment issues which consist of:

Air pollution: the cause is from CO2 emanation ( wikipedia.org )

Greece CO2 Emission






Petroleum based ( mm meitnerium )






Natural Gas based ( mm meitnerium )






Coal based ( mm meitnerium )






Entire CO production ( mm meitnerium )






Water pollution

Entire Greenhouse Gas Emissions

Country Rank ( GHG end product )

Natural Hazards


SWOT analysis


Greece belongs to EU which brings a batch of advantages such as free motion of goods, free motion of capital, free motion of services and “ the states of the EU all instill the same external duty on all the goods come ining their market. Once the goods are in the mark market, they can non be taxed any further than they already have. ” ( European Union Member )

“ A member of North Atlantic Treaty Organization ” ( NATO )

Their exports

Well educated 97.1 % Literacy rate ( List of countriies by literacy rate, 2009 )

Greece is a popular finish for tourer – Greece has been an attractive force for international travellers since antiquity for its rich and long history like Greece mythology and for its glorious Mediterranean coastline and beaches.

“ A common currency – Greece uses EUR or a‚¬ which is the 2nd largest modesty currency and the 2nd most traded currency in the universe after the U.S dollar ” . ( A common currency )


Greece has a immense debt load that affected to the Euro currency and could cut down Greece ‘s ability to supply services to their people. Therefore, extra revenue enhancements and weakened state-sponsored services are the solution to this debt job. However, this solution affects concerns and consumers ability to buy goods and services.

Society is non safety and stable. There are major grounds lead to unsecure of Greece and people ‘s benefits were cut by authorities one of them. Therefore, it led to “ Strikes And Bombs In October, in a move that provided for a negative impact on the touristry sector, Grecian public violence constabulary used tear gas to clear dramatic staff obstructing the Acropolis, the state ‘s most celebrated antediluvian site. Two fishy bundles were besides detonated by constabulary at the cargo terminus of Athens Airport. ” ( Greece Tourism Report Q1 2011, 2011 ) . And little bombs exploded at the Swiss and Russian embassies in Athens, it was found and destroy by constabulary on November, 2010.


They can accomplish more foreign markets

They can pull more tourers

Information engineering ( IT ) development – IT promotion can actuate Greece ‘s economic system and do occupations and gross for the authorities.


Collapse about Economic – The recession, even has non ruined the whole economic system, but already had a immense impact on the economic system of Greece. The prostration of different economic systems every bit good as planetary crisis made Greece ‘s trading spouses fall into bad state of affairss so that the exports will be reduced.

Because of its immense debt these old ages, Greece faced the lifting rising prices. Therefore, investors may experience that the economic is non guaranting for them to put in here.

Fiscal Austerity plans: Many authoritiess all over the universe will cut down disbursals and raise revenue enhancements to avoid financial shortages that rose during the fiscal crisis. These plans will diminish authorities disbursals in the economic system, which will cut down growing rates. The fright is that cut downing might be so much that they can impact the economic system.

Cordial reception industry

“ Greece which is a beautiful state attracts about more than 16 million tourers per twelvemonth, hence it earns and contributes about 75.8 % to the national GDP and provides 65.1 % of occupation for work force ” . ( wttc ) As known that the touristry substructure in Greece has been improved and invested since the 2004 Athens Olympic Games and will continuously concentrate on spread outing the figure of of import undertakings. Hereby, there are the statistic tabular array of figure of hotel in Greece was classified:

Star Rating



5 Star



4 Star



3 Star



2 Star



1 Star






“ Hospitality hotel gross in the Athens parts went down by merely over 6 % year-on-year in the period January to August 2010. While the traditional high season was from July to August, both three – and four-star hotels besides have reported strongly decreased in gross per available room. The mean room tenancy rate was at 57.7 % with gross per available room at EURO 63.14 over eight-month period. More recent information for September show that Athens hotel ‘s tenancy dropped well, falling 10.3 % compared with the same month 2009, with rates down about 7 % year-on-year for the first nine month of 2010 ” . ( reportlinker )

Harmonizing to the information of National statistic agent and GBR Consulting and FianacialTimes in Greece, “ the international reaching in 2010 at Athens airdrome has decreased by 3 % which compared to 2009. The public presentation of cordial reception industry in 2010 has showed that the RevPAR of all hotels in Athens City has decreased by 7 % , in Thessaloniki by 12.9 % ” . ( FinancialTimes ) ( wttc )

However, soon, due to the political system has been unstable and the fiscal crisis has been occurred in Greece, this led the society has been affected and in an insecure state of affairs. Harmonizing to intelligence on web sites of CNN.com and BBC.com, “ on October 2010, the month with work stoppages and bombs which happened normally impacted on the touristry sector so much. Greece constabularies had to utilize tear gas to squelch the public violence of the dramatic staff obstructing the Acropolis which is the state ‘s most celebrated antediluvian site. On the following month of same twelvemonth, at the Swiss and Russian embassies in Athens City there were little bombs exploded, and other leery bundles were besides discovered and destroyed by the governments. Besides that, at the cargo terminus of Athens Airport, the Greece constabularies exploded two suspect bundles ” ( bbc ) . This is seemed as the terrorist actions which have been taken topographic point. And as postulations, the public violences and work stoppages will continually be taking topographic point and unknown when it will stop.

This is a consequence of a state which used to pass a batch of money while it did n’t hold. And it had to borrow money from other states and organisations for deciding its ain debt.


Based on information we found and analyzed as above, although Greece which is really beautiful and attracts a batch of tourers from over the universe is populating from touristry but we find that there are wholly three points which perform the state Greece is non a good state to put the hotel concern.

First, the authorities system and civil order are non stable and there are struggles between political parties

Second, due to the unstable of the political system and fiscal crisis are still go oning, this lead to the insecure in society. This is illustrated that soon there are many public violences and work stoppages are taking topographic point in Athens City.

The last but non least, in society, the offense, the terrorist and the insurgence is the most concern jobs which Greece authorities has to face.

For those jobs, they affect to our investing undertaking in Greece. Because at the minute, Greece still owes a immense debts from European states and IMF ( international Monetary Fund ) with touch conditions of adoption and can neglect in paying back. Therefore the authorities has increased and tightened the revenue enhancements on fuel, intoxicant and etc ; increased the retirement age by two old ages ; forced public sector wage cuts and applied difficult new revenue enhancement.


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