Issue № 36. February 2013

The Main Problems of Greek Economy: On the Causes of the Current Crisis in Greece

Graduate student, Faculty of History, Lomonosov Moscow State University; History and Social Studies teacher, Gymnasium No 710, Russian Academy of Education.
E-mail: a_aleksandrova@inbox.ru

At the end of 2009 a financial crisis began to develop in Greece, by May 2010 spreading over the whole euro area. The emergence and rapid development of the crisis was due to the sharp decline in investor confidence in the stability of the Greek economy. It caused a large-scale speculative games to increase interest rates on government bonds of the country. As a result, Greece has lost access to international financial markets, and was forced to seek assistance from the EU and IMF to refinance its debt.

The article examines the internal problems of Greek economy, which caused the loss of confidence in the country and, as a consequence, a deep financial and economic crisis. Rapid development of the Greek economy in the pre-crisis decade was due to the country’s membership in the EU and especially in the euro area. However, this growth, largely artificial, lacked stability, and deep economic problems of Greece, accumulated over the years, did not find a solution. A number of structural weaknesses of the economy had led to a huge budget deficit, and that, in turn, led to an excessive increase of the national debt. The internal problems of Greece were compounded by the global financial and economic crisis and resulted in the debt crisis of 2010.

Keywords

Global financial and economic crisis, European Union, economy of Greece, budget deficit, public debt.