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- GDP (PPP):
- $289.4 billion
- -0.2% growth
- -2.1% 5-year compound annual growth
- $26,669 per capita
- Inflation (CPI):
- FDI Inflow:
Greece’s economic freedom score is 57.3, making its economy the 115th freest in the 2018 Index. Its overall score has increased by 2.3 points, with dramatic increases in the scores for government spending and fiscal health easily offsetting declines in investment freedom and government integrity. Greece is ranked 43rd among 44 countries in the Europe region, and its overall score remains below the regional and world averages.
Under the supervision and guardianship of its international creditors, Greece has made progress in restoring macroeconomic stability and implementing much-needed initial fiscal adjustments. The public sector still consumes more than 50 percent of GDP, however, and Greece continues to confront a daunting debt burden and severe erosion of competitiveness. The rigid labor market impedes productivity and job growth, and corruption remains a problem. The economy is hostage to powerful public unions, and the government’s statist model undermines entrepreneurs.
Greece achieved independence from the Ottoman Empire in 1830, joined NATO in 1952, and joined 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 2015, but Greece remains mired in political and economic uncertainty. The economy has contracted severely since the 2008 financial crisis and has yet to recover; unemployment remains very high. Shipping and tourism are the main industries, with tourism accounting for eight out of 10 new jobs in 2016. Greece has been beset by a series of crippling strikes and protests in the face of austerity measures.
Laws to protect property rights are not strongly enforced, but enforcement of contracts has improved. Greece has an independent judiciary, but the court system is sometimes inefficient. Corruption remains a problem, and officials sometimes engage in corrupt practices with impunity. While tax enforcement efforts have become more robust in recent years, authorities have largely failed to prosecute tax evasion.
The top personal income tax rate is 42 percent. The top corporate tax rate has been increased to 29 percent. The overall tax burden equals 36.8 percent of total domestic income. Over the past three years, government spending has amounted to 51.3 percent of total output (GDP), and budget deficits have averaged 2.4 percent of GDP. Public debt is equivalent to 181.3 percent of GDP.
With government focused on avoiding political or economic collapse, little attention has been paid to improving a business regulatory environment that ranks near the middle for European countries. Labor regulations are restrictive, and labor mobility is lacking. The government continues to maintain some direct price controls on goods and services, and some well-connected special interests receive poorly targeted subsidies.
Trade is significant for Greece’s economy; the combined value of exports and imports equals 61 percent of GDP. The average applied tariff rate is 1.6 percent. Nontariff barriers impede trade. Government openness to foreign investment is below average, but inflows of foreign direct investment have resumed. The financial system’s overall stability has been severely undermined by the crisis, and banks remain under significant strain.