According to one of the UK’s leading economic think tanks, the National Institute of Economic and Social Research (NIESR), Greece faces a permanent recession if it receives no debt relief whatsoever. The NIESR estimate that only a 55% reduction (equivalent to 195 billion euros or $212 billion) in the total debt would leave the country with any chance of reducing the debt level to 120% of their GDP. Austerity measures designed to assist the Greek economy include increases in VAT, which themselves will result in a 1% drop in 2016 national output. Furthermore, when the Greek economy stops contracting in the middle of next year, the NIESR reports that Greece’s GDP will be 30% lower than in 2010 (the beginning of the crisis) and even 7% lower than when they joined the European currency in 2001.
Greek shares are continuing to slide since their stock exchange resumed trading on Monday. Falls have been seen on each of the 3 days; today, the banking sector saw losses of 25% – this had been at the 30%-level for the two previous days. An agreement between the government and the European Central Bank means that local investors cannot purchase shares with bank-held deposits, only with the cash from their home safe deposit boxes.
Greece’s capital controls, as directed by Europe, are limiting citizens’ access to their money – with little hope on the horizon of improvement. If you believe the Greek situation is the shape of things to come for many nations, even possibly the U.S., please Like & Share this post.
