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The development of the modern Greek economy began in the late 19th and early 20th centuries with the adoption of social and industrial legislation and protective tariffs and the creation of the first industrial enterprises. Industry at the turn of the century consisted primarily of food processing, shipbuilding, and the manufacture of textiles and simple consumer products.
Greece achieved high rates of growth in the late 1960s and early 1970s due to large foreign investments. In the mid- 1970s, Greece suffered declines in its GDP growth rate, ratio of investment to GDP, and productivity, and real labor costs and oil prices rose. In 1981, protective barriers were removed when Greece joined the European Community. The government pursued expansionary policies, which fueled inflation and caused balance-of-payment difficulties. Growing public sector deficits were financed by borrowing. In October 1985, supported by a 1.7 billion European Currency UnitThe European Currency Unit (₠; ECU was a basket of the currencies of the European Community member states, used as the unit of account of the European Community, before being replaced by the Euro. The European Exchange Rate Mechanism attempted to m (ECU) loan from the European UnionFor other uses, see EU (disambiguation). The European Union or EU is a supranational organisation of 25 European states. It was established with that name by the Treaty on European Union (commonly known as the Maastricht Treaty) in 1992 but many aspects o (EU), the government implemented a two-year "stabilization" program with limited success. Public sector inefficiency and excessive spending caused government borrowing to increase; by the end of 19921992 is a leap year starting on Wednesday. Events January January The Internet Society is formed. January 1 Boutros Boutros-Ghali of Egypt replaces Javier Perez de Cuellar of Peru as United Nations Secretary-General January 1 George H. Bush becomes the fi, general government debtGovernment debt (sovereign debt) is debt owed by the government of a sovereign country either to residents or non-residents. Sovereign debt problems have been a major public policy issue since World War II, including the treatment of debt related to that exceeded 100% of GDP.
Greece continued to rely on foreign borrowing to finance its deficits. Public sector external debt was $32 billion at the end of 19981998 was a common year starting on Thursday (see link for calendar), and was designated the International Year of the Ocean''. Events January January 1998 A massive ice storm, caused by El Nino, strikes New England, southern Ontario and Quebec, resulting. The general government debt was $119 billion at the end of 1998, or 105.5% of GDP. Greece's external debt was $32 billion at the end of 1998.
Greece, as a member of the European UnionFor other uses, see EU (disambiguation). The European Union or EU is a supranational organisation of 25 European states. It was established with that name by the Treaty on European Union (commonly known as the Maastricht Treaty) in 1992 but many aspects o, strived to reduce its budget deficit and inflation rate in order to meet the prerequisites for the Economic and Monetary Union. Although growth remained above the convergence program guidelines, high budget deficits and deficient infrastructure continued to dampen the economy's long-term potential growth rate.
In May 1994, the Bank of Greece successfully managed a currency crisis triggered by the lifting of currency restrictions on short-term capital movements. The bank contained speculative attacks on the drachma by tightening its monetary policy and raising interest rates dramatically: For a few days, interest rates pushed as high as 180%. In less than 2 months, with speculation on the drachma no longer a threat, interest rates returned to normal levels. A similar wave of speculation was beaten back in the fall of 1997, following the Asian financial crisisThe Asian financial crisis was a financial crisis that started in July 1997 in Thailand, and affected currencies, stock markets, and other asset prices of several Asian countries, many part of the East Asian Tigers. It is also commonly referred to as the.
One of the successes of recent Greek economic policy has been the reduction of inflation rates. For more than 20 years, inflation hovered in the double digits, but a combination of fiscal consolidation, wage restraint, and strong drachma policies resulted in lowered inflation. Inflation fell to 2.0% by mid-1999. High interest rates have been historicallz a significant problem. The government's strong drachma policy and Public Sector Borrowing Requirement (PSBR) made the lowering of interest rates difficult, but progress was made in 1997-99 and rates gradually declined in line with inflation.
In 2001 Greece joined the Economic and Monetary Union (eurozone). Interest rate policy is now in the hands of the European Central Bank.
Due to the more stable macroeconomic framework and lower interest rates, growth has picked up significantly. In 2003 the greek economy grew at an estimated rate of 4.7, the fastest in the EU. A part of this has been sustained by the investment in infrastructure in the run up to the Summer Olympic Games 2004 to be held in Athens.
Recent economic performance has been satisfying. However the challenge for policymakers now is to avoid an economic slump after the enthusiasm of the Games has gone and the EU farm subsidies get cut in 2006.
In 2004, EurostatThe Statistical Office of the European Communities Eurostat is the statistical arm of the European Commission, producing data for the European Union and promoting harmonisation of statistical methods across the member states. Two of its particularly signi, the statistical arm of the European Commission revealed that the budgetary statistics, on the basis of which Greece joined the European monetary union, had been falsified by the Greek government.