The upcoming week is a significant one for Greece, the euro zone country where the debt crisis originated. Prime Minister Antonis Samaras is going to Berlin to meet for the first time with German Chancellor Angela Merkel, to discuss an extension of the deadlines by which Greece is to meet the terms of its bailout deal. While Merkel is said to be leaning towards easing Greece’s bailout terms, doing so could carry significant political risks for her as at least two German lawmakers are objecting to such.
Last week, new data showed that Greece’s economy shrunk to its 2005 level in the second quarter, the worst in the last eight years; its gross domestic product shrank 6.2 percent in the last quarter. Unemployment keeps going up and is now at 23.1 percent; it is 54.9 percent for those aged 15 – 24 years old. Greece is in its fifth year of recession.
A few more signs of the challenges Greece is facing:
1) The Greek government has imposed an unofficial spending moratorium, says the newspaper Ekatherimini. While government spending for this year was budgeted at 108.5 billion euros, only 40.9 billion had been spent by the end of July.
2) Greece must show that it can cut, er, save 11.5 billion euros over the next two years to receive a next tranche of desperately needed bailout funds from the “troika” of the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission. Of that, at least 4 billion euros must be used to pay off the country’s debts.
More austerity measures — salary and pension cuts, higher taxes — seem inevitable and, according to the daily To Vima, police are expecting an upsurge in violence including robberies. While there were around 1,000 robberies reported in 1991, there are expected to be over 7,000 by the end of this year.
3. To Vima also says that police are anticipating an increase in racist attacks. Earlier this month, a 20-year-old Iraqi was killed in Athens; similar violence against immigrants has occurred elsewhere in Greece. According to officials, a “right-wing militia group” has declared itself behind the attacks. Police say that it is “extremely difficult” to trace the perpetrators.
4. Summer sales at Greece’s malls and department stores, which had so far seemed to be “the most resistant to the crisis,” are slumping. Ekatherimini says that a clothing chain, Sprider Stores, has reported a 25 percent drop in sales and plans to reduce its stores throughout the country from 115 to 80.
Overall, for the first five months of 2012, clothing and footwear revenues were down 22.3 percent year-on-year; those at department stores were down 11.5 percent and those at furniture and electronics stores fell 18.2 percent.
5. On a cheerier note, the Guardian says that the Greek National Tourism Organization (EOT) “in an attempt to boost its biggest revenue generator – tourism – after riots, protests and burning cars…. has now resorted to giving away free trips to the country on Facebook.”
To enter, you can share photos promoting a “positive vision of Greece” (like the one illustrating this post; I took it while traveling in Greece with students in 2011) to win a seven-night trip around the country.
I can assure you, Greece is a great country to visit.
Here’s the EOT’s Facebook page should you be interested in a Greek idyll in case you weren’t able to travel this summer — if the trip is for this year, chances are you’ll still be able to use euros.
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Photo taken in Delphi, Greece, in March 2011 by the author.