Greece: Selected Issues

Abstract

1. The crisis has had a lasting impact on private Non-Performing Loans (Percent of total loans) sector balance sheets and the ability to service debt. 60 As a result of the crisis, GDP contracted by 25 percent, 50 and unemployment has risen sharply to a peak of close 40 to 28 percent in 2013. Corporate turnover has 30 collapsed by a third, property prices have halved, and 20 disposable income has shrunk significantly. 10 Consequently, the non-performing loan ratio (NPLs) 0 FIN NLD DEU LUX FRA BEL LVA ESP AUT MLT PRT ITA IRL has reached the second highest level in the Eurozone, SVN GRC CYP Sources: Bank of Greece; and 2015 EBA report. Note: Data for Greece as of March 2016, data for others as of June 2015. and the amount of uncollected tax and social security claims, at 70 percent of GDP, represents the highest Private Sector Arrears (Percent of GDP) level in the Eurozone. Although private debt relative to 160 Bank NPE 140 GDP is low compared to other European countries, the 120 Tax debt 1/ debt-servicing capacity of businesses is severely 100 constrained due to the collapse in turnover, and this 80 60 results in severe liquidity constraints and, eventually, in 40 insolvency.