GREECE - ECONOMY

Greece has a capitalist economy with the public sector accounting for about 40% of GDP and with per capita GDP at least 75% of the leading Eurozone economies. Tourism provides 15% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled labour. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP. The Greek economy grew by nearly 4.0% per year between 2003 and 2007, due partly to infrastructure spending related to the 2004 Athens Olympic Games, and in part to an increased availability of credit, which has sustained record levels of consumer spending. Greece violated the EU’s Growth and Stability Pact budget deficit criteria of no more than 3% of GDP from 2001 to 2006, but finally met that criterion in 2007. Public debt, inflation, and unemployment are above the Eurozone average, but are falling. The Greek Government continues to grapple with cutting government spending, reducing the size of the public sector, and reforming the labour and pension systems, in the face of often vocal opposition from the country’s powerful labour unions and the general public. The economy remains an important domestic political issue in Greece and although the ruling New Democracy government has had some success in improving economic growth and reducing the budget deficit, Athens faces long-term challenges in its effort to continue its economic reforms, especially social security reform and privatization.

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