Underlying obstacles to job creation and entrepreneurship remain
After eight years, Greece has finally exited bailout territory, and the European Union is making a strong case that the program was a success.
While Greece may have ended the bailout process, the underlying issues that wrecked its economy in the first place remain largely intact.
The Real Problem
Greece’s challenge is—and has always been—one of competitiveness and bureaucratic impediments to business and job creation.
In the latest World Economic Forum’s Global Competitiveness Index, Greece (87) ranks far below its neighbors Spain (34), Portugal (42), and Italy (43). In fact, its competitiveness ranking is nearer to that of Algeria (86) and Guatemala (84), both non-OECD countries.
On top of that, Greece has one of the worst fiscal systems. It imposes a very high tax wedge that limits job growth, alongside high bureaucracy and aggressive taxation on small and medium enterprises. Greece ranks among the worst OECD countries for ease of doing business as measured by the World Bank’s Doing Business report, 67th out of 190 countries, well below Spain (28th), Italy (46th), and Portugal (29th).
Non-Solutions Spell Peril
The main risk for the eurozone, which is already showing signs of economic slowdown, comes from a prolonged period of non-solutions.
Greece still shows the highest non-performing loan figure (43.3 percent) relative to total loans of the eurozone, per ECB statistics on Q1 2018.
However, while deficits have been contained—mostly by raising taxes—public debt has not fallen. According to Eurostat, Greece’s public debt as a share of GDP stood at 178.6 percent in 2017.
Full article: Greece’s Bailout May Be Over, but Not Its Economic Woes (The Epoch Times)