Lessons from a bounce-back nation
The head of the European Central Bank, Christine Lagarde, praised the Greek people this week for their “remarkable” resilience. No, it was not praise for enduring the pandemic, responding to large numbers of migrants, or recovering from disastrous fires in Greece. She honored them for demonstrating “phenomenal recovery capacity” during a recession longer than America’s Great Depression and for “stellar performance” in reforms reaching deep into Greek society.
“The people of Greece have been on a long journey. It has been a hard journey,” Ms. Lagarde said in Athens. “But they never lost sight of the destination.”
Greece’s economic crisis began in 2009 when a new government admitted the country had long lied about the size of its national deficit, igniting fears of excessive debt in Europe that almost brought down the continent’s experiment with a single currency, the euro. Years of austerity, reforms, and outside assistance to Greece followed.
Yet the honesty in exposing fiscal data helped set a spirit of integrity for achieving what the current prime minister and a Harvard graduate, Kyriakos Mitsotakis, calls “stability, consistency and continuous progress.” Last week that progress resulted in Greece receiving a big pat on the back from S&P Global Ratings. After 13 years of its debt being classed as junk bonds, Greece now has a positive rating for investors.
One reason is that the ratio of public debt to gross domestic product has fallen 35 percentage points since 2020, a stunning decline. Joblessness is down, tax collection has improved, the minimum wage is up, and pensions have risen. Last year, Greece’s economic growth far exceeded the average in the European Union.
Much work still needs to be done. Most self-employed professionals still report small incomes to evade taxes. People filing lawsuits must wait 4 1/2 years for their case to be heard in court. The country struggles to diversify away from a heavy reliance on tourism.
Yet in two measures of a change of attitudes, Greece is faring well. Public support for the euro and for membership in the EU has risen during the country’s decade of severe trials. Greece’s resilience “can serve as an inspiration for all of us,” said Ms. Lagarde, “as we contend with a more volatile world and the many challenges it brings.”
