What Was the Ancient Name of the Minoans?
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After almost seventeen years since the debt and financial crisis hit Greece, in a recent presentation about the state of the Greek economy by Dr. Kosmas Marinakis, Senior Lecturer of Economics at Singapore Management University, and his research partner Achilleas Mantes, Macroeconomic Modeller at Agence Française de Développement, people got an unexpected reality check.
They presented hard data without any political spin or feel-good stories. Simply raw numbers about where Greece actually stands seventeen years after everything began spiraling downwards.
Dr. Marinakis noted that the average person remains largely unaware of the true state of the Greek economy. He attributed this not only to political narratives and the fact that the media simply reproduce those narratives, but also to the lack of clear, unbiased, and accessible economic explanations in Greece over recent decades.
To address this gap he conducted a scientific study aimed at presenting the real condition of the Greek economy in a way the average citizen can understand, using actual Eurostat data that anyone can check.
Greece has been used for many decades to compare itself with the most powerful nations of Europe or with the EU average. However, these researchers tried something different. They compared the Greek economy to the ten poorest EU countries. So they compared Greece to Romania, Croatia, Hungary, Estonia, Lithuania, Bulgaria, and the rest of the Eastern European block that joined the EU in the early 2000s.
What they found was not what anyone wanted to hear. While those countries are actually catching up to European standards, Greece is moving in the opposite direction. Yes, after all those years of economic turbulence, the country is still diverging instead of coming closer to the EU average.
What is truly saddening and hard to swallow is the cruel realization that countries from Eastern Europe that were miles behind the Greek economy 10-20 years ago, are now catching up or even overtaking it in national income and purchasing power.
Greece owes money. A lot of money; that’s nothing new. And despite the huge progress that’s taken place in the last 5-10 years, the country still owes a lot. We’re talking 153% of GDP, which sounds abstract until you realize that this means for every euro the country produces, it owes one-and-a-half euros to someone else. Compare that to 76% for the EU average, or under 50% for those ten poorest countries mentioned above.
Additionally, the researchers found that the reduction in Greek debt from 2020 to 2024—amounting to 56 percentage points—is mainly due to the high inflation observed over the past four years, which cumulatively reached 18.6% of GDP. Therefore, out of the 56-point debt reduction, 32 points are attributed to inflation, while only 24 come from real GDP growth and debt repayments.
The share of GDP allocated to investment in the European Union ranges between 20% and 25%. However, the ten poorest countries invest more than the European average. Why? Because they grow faster. In fact, that’s also why they grow — because they manage to channel investment into productive and internationally tradable sectors. Greece used to do the same until 2008. After that, however, investment in the country collapsed, and it’s only since 2019 that Greece has seen a recovery — one that is not as positive as it is often presented.
The seven sectors that absorb most investment in Greece and in most European countries are construction, public investment, manufacturing, agriculture, transport, technology, and trade. But what left the researchers speechless was the level of investment in construction — in real estate. For Greece, this is extremely problematic because it essentially shows that the Greek economy has never been much more than construction and some public spending. In essence, the Greek crisis was nothing more than the collapse of real estate investment and the freezing of public expenditure. All other sectors have remained mostly stagnant, Dr. Marinakis says.
That’s why the much-hyped recent return of investment is not as positive as it seems. The country’s investment model has not been corrected — capital has not shifted toward manufacturing, technology, transport, or trade. Instead, Greece has gone back to the same pattern that led the country into the crisis. Since 2019, Greece basically resumed building houses. Of course, real estate is necessary in any country — especially in Greece — and it’s good to invest in it. But truly productive investments in manufacturing, technology, transport, trade, and agriculture have not arrived. This is a very worrying sign for the country’s economic future.
Meanwhile, supposedly poorer European countries — like Hungary, Slovenia, the Czech Republic, and Poland — are doing much better in those sectors. That’s why all these countries have already surpassed Greece in purchasing power, and as time goes on, they will continue to leave it further behind in every aspect.
This is probably the most depressing part of the whole study presented. Greece produces smart and very well-educated people: university graduates, engineers, economists, you name it. But because the economy of the country has suffered so much and is so simple and low-value, these people end up working jobs that have nothing to do with their skills. It is not uncommon for Greek software developers to wait tables, architects to drive taxis and economists to sell souvenirs to tourists.
Greece today is a country that has all this human capital leaving it rot away because there aren’t enough complex, high-paying jobs to go around. The researchers call this a direct result of the Greek economy ranking dead last in the EU for “economic complexity.”
Basically, the country doesn’t make anything sophisticated that commands high prices. On the other hand, you have Eastern European nations, such as Estonia, countries with less than 2 million population with a communist past now building digital infrastructure or Slovenia advancing in manufacturing precision equipment.
Here is where more misconceptions are being spread. Whenever someone points out how bad Greece’s official economy looks, there’s always that person who says, “Yeah, but what about all the cash business and shadow economy (also know as informal economy)? It makes up for everything!”
Dr. Marinakis challenges the common narrative about Greece’s shadow economy, explaining that “black money” eventually cycles back into the formal economy through spending and that economists can reasonably estimate the size of the shadow economy.
According to the World Bank’s latest data (2020), Greece’s shadow economy is estimated between 26% and 30% of GDP—slightly higher than the 24% to 27% range in the poorest 10 European countries.
However, this small difference of about 2.5% is nowhere near enough to explain Greece’s significantly lower purchasing power, which lags nearly 22% behind those countries. Thus, the idea that Greeks fared better economically due to the shadow economy is unfounded.
Since 2010, labor costs in Greece have been flatlining, but let’s be honest – if your wages haven’t moved in over a decade, that doesn’t make you more competitive, it makes you poorer.
As for the average Greek, the cost of living crisis is still rampant. Wages, particularly the minimum wage, have risen in Greece in the last few years but the problem is that prices of everyday goods, transportation and housing have skyrocketed, making the purchasing power of the average citizen much lower. To be more precise, Greeks are only better off than the Bulgarians, with every other Eastern European having surpassed the country’s purchasing power.
Greece has some real advantages – geostrategically important and naturally beautiful location, well-educated population, cultural assets that draw millions of visitors but advantages only matter if you actually use them strategically. You can’t fix problems you won’t acknowledge exist, and based on this data, the Greek economy has some serious problems that decades of political fairy tales haven’t made disappear. Maybe it’s time to listen to the economists instead, as the numbers certainly suggest the politicians haven’t been getting it very right lately.
