Pity the Greeks. Today as they commemorate their 'OHI' to Italy's fascist regime and their joining the Allies in World War II, instead of enjoying the traditional military parade as it snakes through the plateies festooned with white and blue ribbons and flags, they will be contemplating a far grimmer scenario: GDP forecasts show a negative growth of between -1,5% and even -3% depending on whose predictions you go by. Weak economic growth, which has blighted the whole of 2015, has led to the worst deflation in Europe, at -1,7%.
Unemployment, as of August 2015, hit a quarter of the people -- the worst rate in Europe. Almost half of the under-25s have no jobs. This looks set to worsen in winter.
National debt increased to 168,6% of GDP in the first quarter, the highest percentage within the EU. Individual bank savings have shrunk below 130 billion, the lowest level in the last 11 years. Around €45 billion, though, is suspected of being tucked under people's mattresses: Greeks no longer trust the system. Nor do the credit rating agencies which have downgraded the country to CCC+. As Ioanna Tsiviki, a small retail shop owner, puts it: "Capital controls have shrunk the market. People are able to withdraw 60 euros a day. They think twice before they spend it on anything, even the basics. In addition, I import goods from the EU. The uncertainty of the economy resulted to the loss of our credibility as business people and stained our image for our suppliers. We are now required to pay for the goods upfront, because doing business with us is considered risky. As for business loans, we borrow at 4-5% interest, much higher than EU average. And all this for what? Heavy taxation that in some cases means 120% of your profits. It's like the state is telling you they want to exterminate you and pushing you to either evade tax or go bust."
In 2014, Greece was doing well and made some progress under the previous coalition government (the right wing New Democracy and its socialist partner Pasok). Tourism enjoyed a record of 21+ million visitors, recession slowed down and a possible recovery with small growth was predicted.
Nathan Gamester, Programme Director of the Legatum Institute's Prosperity Index, describes how his index captured this brief respite from the Greek crisis: "The 2015 Prosperity Index shows us that conditions were improving and things were looking up in Greece in 2014 and it provides a snapshot of prosperity up to the change in government. Judging by the early current research and data, I'm not too optimistic about Greece's fate. Future editions of the Prosperity Index will tell us what the true impact of Syriza's coalition government is on Greek prosperity."
Some of this is already being felt across the economy: the election of the new governing coalition between Syriza and ANEL brought instability due to the seven month-long negotiations with the creditors. The uncertainty of a referendum, and the imposition of capital controls as a result of huge withdrawals from the banking system, made for a troubled summer.
Tourism declined and many reservations were cancelled. "Holding a referendum during the summer season, especially one with an uncertain outcome was wrong and pushed away tourists to other nearby countries" states Dimitris Petakakis, a young tourism entrepreneur, owner of a small pension of rooms in Sarti, Chalkidiki. "The capital controls resulted in numerous cancellations and for our sector this was catastrophic." His disappointment is obvious: "With only €60 a day, I was unable to fulfil my duties towards the state, my suppliers, and even my personal expenses. And the funny thing was that, even though the government created this unstable situation, if I was unable to pay my taxes I would be fined!"