Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

If you’ve been waiting for the right time to support our work—that time is now.

Our mission is simple: To inform. To inspire. To ignite change for the common good.

But without the support of our readers, this model does not work and we simply won’t survive. It’s that simple.
We must meet our Mid-Year Campaign goal but we need you now.

Please, support independent journalism today.

Join the small group of generous readers who donate, keeping Common Dreams free for millions of people each year. Without your help, we won’t survive.

For Immediate Release

Contact

Dan Beeton, 202-239-1460

Press Release

New Paper Concludes that Greece Will Need Better Macroeconomic Policies to Exit from Mass Unemployment

WASHINGTON -

A new report from the Center for Economic and Policy Research (CEPR) finds that Greece will need a fiscal stimulus if it is to emerge from years of mass unemployment in the near future. The paper, “The Greek Economy: Which Way Forward?” by Mark Weisbrot, David Rosnick and Stephan Lefebvre notes that after six years of recession, Greece has completed one of the largest adjustments in the world, with import spending falling 36 percent and the government achieving the largest cyclically adjusted primary budget surplus in the eurozone.

“The adjustment is done, with the majority of the Greek people having paid a terrible and mostly unnecessary price for it,” CEPR Co-Director and lead author of the paper Mark Weisbrot said. “Now there needs to be a program to restore employment, instead of the current program which promises mass unemployment for years to come.”

Media reports and economic forecasts have been upbeat about the return to positive GDP growth in Greece in 2014, currently estimated at 0.6 percent. But the report cautions that “Greece’s return to growth last year was not a result of any success attributable to the policies implemented since the economy went into crisis, but rather to the end of the fiscal consolidation.” The cyclically adjusted budget surplus – which measures the government’s fiscal tightening -- moved from 5.7 percent in 2013 to 6.0 percent of GDP in 2014, or just 0.3 percentage points.  In the three years prior, the adjustment had been 3.2 percent of GDP (2012-13), 3.8 percent of GDP (2011-12), and 5 percent of GDP (2010-11).  The paper states: “It should be obvious that this huge drop-off in fiscal tightening would be the main cause of the return to growth.”  

The paper describes the considerable economic and social costs of Greece’s adjustment, with output down by about 26 percent and unemployment currently at 25.5 percent, with youth unemployment at 49.6 percent. “Nominal wages have fallen by 16 percent in the private sector …and by 23.5 percent overall. The government has laid off about 19 percent of its work force.” Yet the IMF forecasts more hardship in the years to come, projecting unemployment to be 15.8 percent in 2018 – a decade after the crisis began – and in 2019 for Greece to be more than 9 percent below its pre-crisis GDP of 12 years earlier.

Greece’s current recovery is fragile, and mandated large primary budget surpluses and other austerity measures will continue to be a drag on economic growth, the report explains.

“There are policy measures that can lead Greece out of this dark period and into a sustained, robust recovery, but these are not the ones that the European authorities have imposed on Greece,” Weisbrot said. “Rather, these would be options that have worked in other countries experiencing similar crises and recessions: most importantly, an economic stimulus to replace lost private sector demand.”

Weisbrot noted that the European Central Bank could help Greece’s recovery with its new quantitative easing program, by buying Greek sovereign bonds and keeping its interest rates low, as well as other measures to ensure financial stability.

###

The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people’s lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.

80+ US Prosecutors Vow Not to Be Part of Criminalizing Abortion Care

"Criminalizing and prosecuting individuals who seek or provide abortion care makes a mockery of justice," says a joint statement signed by 84 elected attorneys. "Prosecutors should not be part of that."

Kenny Stancil ·


Progressives Rebuke Dem Leadership as Clyburn Dismisses Death of Roe as 'Anticlimactic'

"The gap between the Democratic leadership, and younger progressives on the question of 'How Bad Is It?' is just enormous."

Julia Conley ·


In 10 Key US Senate Races, Here's How Top Candidates Responded to Roe Ruling

While Republicans unanimously welcomed the Supreme Court's rollback of half a century of reproductive rights, one Democrat said "it's just wrong that my granddaughter will have fewer freedoms than my grandmother did."

Brett Wilkins ·


Sanders Says End Filibuster to Combat 'Outrageous' Supreme Court Assault on Abortion Rights

"If Republicans can end the filibuster to install right-wing judges to overturn Roe v. Wade, Democrats can and must end the filibuster, codify Roe v. Wade, and make abortion legal and safe," said the Vermont senator.

Jake Johnson ·


Patients in Trigger-Ban States Immediately Denied Abortion Care in Post-Roe US

Some people scheduled to receive abortions were turned away within minutes of the right-wing Supreme Court's decision to strike down Roe v. Wade.

Kenny Stancil ·

Common Dreams Logo