Greek Economy Needs Longer Adjustment Period

Reports from BBH point out the require for a new memorandum about understanding separately the outcome of Greece’s upcoming election.  Primarily, the 2 major sources of the country’s revenue, the tourism and shipping are greatly damaged.

The Chinese expansion greatly diminish  the shipping industry in Greece. The Greek’s has an overall account of 16% of the entire global merchant fleet. According to Marc Chandler, a market analyst, Greece shipowners revenue fell %8.6 last year and most of the unionized Greek ship builders and repair workers are now unemployed.

A sad fate for tourism too, as there are large cancellations since the crisis began at May, followed by the tour bus strikes, because of a 50% cut in pay and benefits.

The Greece health care owes over 540 Million Euros to pharmacies, there are even medical supplies shortage reported.  Also Gazprom, a Global Energy company threaten to cut Greece off if it will not be able to make payment at the 2nd of June. The energy business chain has not been able to to pay its suppliers, even their own Electricity Market Operator.

Greece is not self-sufficient, so leaving the Euro would not solve its problem, and if it will remain in the European Monetary Union, Greece will need a new  “memorandum of understanding” despite of the new arrangement of the new administration. According to Chandler as he points out the much greater costs for the European Union members in case of Greek exit, “It will require a longer adjustment period, more investment funds, and at some point debt forgiveness by at least part of the official sector, just as the private sector provided some forgiveness earlier this year.”

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