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- GDP (PPP):
- $276.9 billion
- -6.4% growth
- -4.4% 5-year compound annual growth
- $24,505 per capita
- Inflation (CPI):
- FDI Inflow:
Greece’s economic freedom score is 55.7, making its economy the 119th freest in the 2014 Index. Its score is only slightly better than last year, with improvements in labor freedom and monetary freedom almost completely offset by deteriorations in investment freedom, the control of government spending, business freedom, and freedom from corruption. Greece is ranked 40th out of 43 countries in the Europe region, and its overall score is below the world and regional averages.
Over the 20-year history of the Index, Greece’s economic freedom score has declined by over 5 points. Despite improvements in five of the 10 economic freedoms, large declines in property rights, freedom from corruption, government spending, and investment freedom have more than offset any gains.
Greece has fluctuated between the ranks of the “moderately free” and the “mostly unfree” throughout the history of the Index. It achieved its highest level of economic freedom in 2010, but its scores have plummeted dramatically since then. Major fiscal weaknesses aggravated by the debt and unemployment crises have not been sufficiently addressed, and the relatively poor economic performance associated with levels of economic freedom that are significantly below other members of the EU has led to a loss of competitiveness and even to political volatility.
Greece joined NATO in 1952 and the European Union in 1981. It adopted the euro in 2002. To confront a sovereign debt crisis in 2010, the European Central Bank and the International Monetary Fund provided emergency loans in exchange for necessary but long-delayed austerity measures. A year later, after a series of violent protests, the government collapsed. A caretaker government was formed in November 2011. When elections in May 2012 failed to produce a government, new elections in June 2012 led to formation of a “pro-Euro” coalition led by the center-right New Democracy party along with the center-left Pan-Hellenic Socialist Movement and the Democratic Left Party. Greece’s economy, which depends heavily on shipping, tourism, and services, has contracted for 19 straight quarters.
Corruption remains a problem in Greece. In April 2012, a former minister of defense was charged with taking millions of euros in bribes from European armaments manufacturers. An October 2012 press report detailed extensive tax evasion by wealthy Greek citizens. The judiciary is independent, and the constitution provides for public trials. Protection of property rights is not strongly enforced.
The top individual income tax rate has been reduced to 42 percent, and the top corporate tax rate is 26 percent. Other taxes include a value-added tax (VAT) and a real estate tax. The overall tax burden is nearly 31.2 percent of GDP. Public spending has stabilized at 52 percent of the domestic economy. Economic recession continues to put pressure on public accounts, and public debt remains over 150 percent of GDP.
The process for launching a company is fairly streamlined and takes only five procedures, but licensing requirements remain burdensome and time-consuming. With high non-salary costs to employ a worker and rigid restrictions on work hours, the labor market remains stagnant. Monetary stability is weak, and Greece is receiving substantial subsidies from the European Union.
EU members have a low 1.1 percent average tariff rate and, in general, few non-tariff barriers to trade. Greece’s government procurement policies sometimes favor domestic companies. Economic uncertainty continues to deter foreign investment. The overall stability of the financial system has been severely undermined, and the banking sector continues to be under strain.