Global Economy / Greece’s economic stability key to strengthening eurozone recovery

By Kensuke Nakazawa / Yomiuri Shimbun Deputy EditorThe eurozone has experienced positive growth for 16 consecutive quarters since the April-June 2013 period. Will it overcome and recover from the debt crisis that was particularly severe in 2010? One focal point is Greece, where the crisis began.

Real gross domestic product in the eurozone showed solid growth for the 2017 January-March quarter, with a 2.3 percent annualized increase compared to the previous quarter. Since the debt crisis settled in 2013, strong consumer spending has improved corporate earnings, which has led to increased capital investment — a virtuous cycle that has stimulated the economy. The unemployment rate in April was 9.3 percent — the lowest level in the eight years since March 2009.

These economic indicators show that, on the whole, the eurozone has shaken off the aftershocks of the debt crisis and is recovering. The European Central Bank is considering reducing its policy of quantitative easing.

Gaps in recovery

Nevertheless, the extent of the recovery varies by country. This can be clearly seen by looking at unemployment rates: Germany 3.9 percent, France 9.5 percent, Italy 11.1 percent, Spain 17.8 percent and Greece 23.2 percent. The economic gap between the north and south is still evident.

In the debt crisis, which flared up in 2010, north-south economic disparity led to the rise of anti-European Union forces. Creditor countries demanded debtor nations adopt harsh austerity policies, resulting in divisions within Europe. The fundamental cause of this trend was Greek’s debt crisis.

Although the Greek economy constitutes just under 2 percent of the eurozone, the debt problem has repeatedly threatened to destroy its economy and shaken global financial markets. For the eurozone to maintain a stable growth rate, it is imperative to solve this problem.

The Greek economy shows signs of having bottomed out, with its gross domestic product for January-March this year up 0.4 percent…

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