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- GDP (PPP):
- $286.0 billion
- -0.2% growth
- -3.8% 5-year compound annual growth
- $26,449 per capita
- Inflation (CPI):
- FDI Inflow:
Greece has made progress in restoring macroeconomic stability and implementing much-needed initial fiscal adjustments. However, the public sector accounts for more than 50 percent of GDP, and the country continues to confront a daunting debt burden and severe erosion of competitiveness.
Serious challenges remain in such areas as government spending and labor freedom. The fiscal deficit remains approximately 4 percent of GDP, and public debt exceeds 170 percent of GDP. Fading business confidence and the lack of competitiveness are serious impediments to economic revival. The economy, stifled by powerful public unions, does not support entrepreneurship. The rigid labor market impedes productivity and job growth, and corruption continues to be a problem.
Greece joined NATO in 1952 and the European Union in 1981. It adopted the euro in 2002. Prime Minister Alexis Tsipras of the Coalition of the Radical Left (Syriza) was able to reestablish a coalition government following snap elections in September 2015. Greece remains mired in political and economic uncertainty. In May 2016, an IMF–EU deal on Greek debt relief led to the release of $11.5 billion in new bailout funds. Greece has been beset by a series of crippling strikes and protests in the face of new austerity measures and has had to deal with high numbers of migrants.
Greek laws extend protection of property rights to both foreign and Greek nationals, but protection of property rights is not strongly enforced. The judiciary is independent, but the court system is extremely slow. Corruption remains a problem in Greece. Although tax enforcement has become more robust in recent years, authorities have largely failed to prosecute tax evasion by economic elites.
The top personal income tax rate has been increased to 42 percent. The top corporate tax rate has been increased from 26 percent to 29 percent. The overall tax burden equals 35.9 percent of total domestic income. Government spending has amounted to 56.2 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.7 percent of GDP. Public debt is equivalent to 178.4 percent of GDP.
Sporadic efforts to enhance the business environment have been undermined by red tape and insufficient political commitment. Labor regulations are restrictive, and the economy continues to lack labor mobility. Resolution of the ongoing Greek debt crisis will require considerably more progress on planned privatizations of heavily subsidized and loss-making state-owned enterprises across a wide variety of economic sectors.
Trade is important to Greece’s economy; the value of exports and imports taken together equals 60 percent of GDP. The average applied tariff rate is 1.5 percent. Foreign and domestic investors are generally treated equally, but bureaucratic barriers may discourage investment. Nonperforming loans are about 50 percent of total banking-sector loans, the second highest level in the euro area.