Greek Economy Suffering From Deflation
Greece has been caught in a financial storm. Some of the practices that were being employed have backfired. The ludicrous idea of providing a full pension to individuals who have worked for 25 years is just one. The latest development is showing that Greece is further down a long and deep tunnel, and the light is still a long distance away.
The Organisation for Economic Co-operation and Development (OECD), have said that the Greek economy will continue to contract during 2014. As a result the country that was once a hotspot for Brits will need more help, specifically financial help.
Forecasts made by the OECD are in line with the prediction made by the Greek government. The former has said that there will be a 0.4% shrinking of the Greek economy, while the latter has said that there will be a contraction of 0.6% next year.
First deflation in 40 years
The OECD went on to say that the recession in Greece has had a stronger and deeper impact than previously thought. And this means debt will not fall below 160% of the GDP until after 2020. What does this mean for Greece? Well it means that Greece is facing a seventh year of recession.
The country has been helped to no end by rescue loans from the International Monetary Fund, and many countries across Europe. In a bid to move forward on a positive step, it has vowed to reduce its debt levels. Furthermore, there are plans to put in place some form of economic reforms.
These changes are of utmost importance, as food staples in the country have increased in price to such an extent that they are quite easily more expensive when compared to other countries. Milk is just one example, and it has increased in price by almost 35%.
Greece have experienced the first deflation to their economy for the first time in 40 years, which makes it even more pressing that they get the assistance they require so that they achieve some form of stability and growth in the future.