Eurocrisis: The Holiday, Like the Olympics, Is Over
Tourism in Greece this summer has been better than hoped, or rather feared.
On Monday, data from the Hellenic Statistical Authority (ELSTAT) revealed that Greece’s economy has shrunk to its 2005 level in the second quarter, the worst in the last eight years. Greece’s gross domestic product decreased by 6.2 percent (which was actually better than the 6.5 percent predicted).
Overall, Greece’s economy has shrunk 17.4 percent since the second quarter of 2008, which was the first quarter the country entered a recession. The Greek economy is 13 percent smaller than it was two years ago, leading some to say that it is not that the country is in a recession (for the fifth straight year) but a depression. A graph in the Guardian shows “how the Greece economy has been contracting almost non-stop since the start of 2009.”
As a former member of the Greek Vouli (Parliament), Elena Panaritis, commented: “We keep on pushing more austerity simply because we have to meet conditionalities, and there is very little done really in terms of growth.”
Germany’s economy minister, Philip Rosler, made it clear over the weekend that he is not happy with Athens’ “failure” to implement reforms and that “I’ve lost my illusions” over Greece’s being able to change. With other German politicians calling for Greece to leave the euro as they do not want to pay out more bailout funds for the weakest economy in the euro zone, Chancellor Angela Merkel, just back from a holiday of opera-going and hiking, has plenty to keep her busy for the rest of the summer.
French president Francois Hollande is also back from his vacation and, with August 13th the symbolic 100-day mark of his term, the honeymoon is quite over for him. Opinion polls suggest that, while a majority (57 percent) think he has kept his election promises (lowering his salary, raising taxes on France’s highest earners, withdrawing troops from Afghanistan), public confidence is waning about whether he can resolve the greatest problems facing France, “the huge public deficit, record 10 percent unemployment and the death of French industry.”
51 percent of those polled think that France is changing for the worst.
Hollande, who campaigned on an anti-austerity platform, is now facing the music as he confronts mass layoffs as well as “an uncompetitive labor market and an inability to pay” for France’s public services and generous welfare state. He must find 33 billion euros by raising taxes (that on the wealthy is not enough) and making budget cuts. Plus, he faces criticism from inaction on the protracted, bloody conflict in Syria.
Yes, talk of Greece leaving the euro for the drachma is again in the air. With commercial real estate markets in Italy and Spain having all but collapsed, murmurs about their continued membership in the euro zone may soon be more loudly voiced.
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Photo Olympics venue built in 2004 in Athens by Metro Centric