1|Page

International Business

Country Analysis

Greece

Submitted By: Group 1

A Sai Sadhana - 17A1HP224
Ryan Raut - 17A1HP271
N Manasa - 17A1HP322
Kumar Karan Gupta - 17A1HP344
Yaswanth Devarapalli - 17A1HP240
Vanaparla Praneeth - 17A1HP201
Lakshmi Sowmya

Submitted To: Prof. Steven Raj

2|Page

Table of Contents

1.Gross domestic product 3

2.Demography 6

3.CPI 8

4.Monetary and finance 11

5.Public Finance 12

6.Index of Industrial Production (IIP) 16

7.Balance of Trade 19

8.Top exports, imports and partners 19

9.External Indicators 22

10.Policy rates 22
3|Page

Gross Domestic Products

Economic Activity
The efforts made by the administration has shown an impressive stabilisation after the crisis
and the reform efforts are finally paying off. The Hellenic Republic is growing again and has
increased from -0.42% (2016Q1) to 2,3% for the first quarter of 2018 and has increased by
0.3% in comparison to 2% for (2017 Q4).
Although the Gross Capital Formation has been very unstable for the last 8 quarters going up
and down, the major contribution in the increase in growth rate has been due to the increase in
net exports at 3.53% which is the highest in the last 22 quarters strengthening the business and
manufacturing sector in the country.

10.00%

5.00%
Contribution to GDP % Quaterly
0.00%
Percentage

-5.00%

-10.00%

-15.00%

-20.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Year

Household General Government Net Exports GCF GDP

Growth over the last decade

The growth rate of Greece has shown impressive stabilisation after the severe crisis that started
from 2009 quarter 1 with the GDP falling to -6.73%. The GDP fell at around -10% in the year
2011, the lowest among the decade. The average GDP growth rate over the last decade is
around -3% due to the debt burdens but started to improve over the years and increased for the
5th quarter in a row for the first time since 2006.The highest GDP growth is observed in 2018
quarter 1 at 2.3%, which is still below the global GDP growth rate.
4|Page

GDP Growth Rate % Annual

4.00%

2.00%

0.00%

-2.00%

-4.00%

-6.00%

-8.00%

-10.00%

-12.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Average GDP

Domestic Demand
As it can be observed from the chart below, the domestic demand from government is negative
and only contribution comes from fixed capital formation and private households. And the
GDP is also driven by these two. Even the fixed capital formation and private households also
displays a highly varying trend for the last 8 quarters. Greece need to focus more on
manufacturing so as to increase the domestic demand.
Domestic Demand
5%

0%
Percentage

-5%

-10%

-15%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Year

Private COnsumption Government Consumption Gross Fixed Capital Formation GDP

In recent news, after nearly a decade of tough negotiations and reliance on creditors, Greece
exited its third bailout program on 21 August, standing on its own two feet for the first time in
eight years. A final disbursement of EUR 15 billion from the European Stability Mechanism
was released at the start of August and the country has a solid cash buffer, large enough to
cover its financing for around 22 months.

Tourism and other export-oriented activities are showing a steady improvement which supports
the labour market and trickles down slowly to the rest of the economy.
5|Page

Net Export of Goods and Services

The net exports have come to an all-time high for the past 23 quarters at 3.53% for quarter 1
of 2018. Greece needs to keep exporting more and reduce the imports in order to improve the
GDP further.

Net Exports of Goods and Services % ann

6%

4%

2%

0%

-2%

-4%

-6%

-8%

-10%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net exports Exports Imports

GDP Per Capita

GDP VS GDP per capita growth rate

6.0 6.0
5.0
4.0 4.0
3.0
2.0 2.0
1.0
0.0
0.0
-1.0 -2.0
-2.0
-3.0 -4.0
-4.0
-5.0 -6.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Growth in GDP Growth in GDP per capita

The growth in GDP per capita has almost been similar with the growth in real GDP with a
minute difference of a few percentage. The trend has been very fluctuating from 2010- 2017.
The GDP per capita increased from -3.7% (2015 Q1) to 2.5% in 2016 and again fell to ---2.8%
for 2017.

The total GDP has decreased from 250459 million Euros in 2010 to 236226 in 2017 and the
GDP Per Capita has decreased from 22524 to 21937 Euros per person from 2010 to 2017.
6|Page

255000 GDP VS GDP Per Capita 23000.0

Total GDP in Million Euros GDP Per capita in Euros

250000
22500.0

245000
22000.0

240000

21500.0
235000

21000.0
230000

225000 20500.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

DEMOGRAPHY

Population Pyramid:

The dotted line indicates the excess male or female population in certain age groups. The data
are in thousands or millions and represent the population in each age group.

The pyramid represents ratio of males and females of different age groups. In 1950, the younger
population is more than the adults and older population whereas in 2017, the middle age
population (age: 40 – 50 years) is more than the rest of the population.
7|Page

Source: United Nations, Department of Economic and Social Affairs, Population Division (2017). World Population Prospects: The
2017 Revision

In 2050, the number of older populations multiplied while in 2100, male to female ratio is more
or less the same.
 8|Page

Total Population Vs Working Population:

TOTAL POPULATION VS TOTAL WORKING POPULATION

10768193
Jan-17 4397200
1027100
3752700
10783748
Jan-16 4408300
1130900
3673600
10858018
Jan-15 4438900
1197000
3610700
10926807
Jan-14 4471500
1274400
3536300
11003615
Jan-13 4466000
1330400
3513200
11086406
Period

Jan-12 4454700
1195100
3695000
11123392
Jan-11 4436700
881800
4054400
11119289
Jan-10 4370300
639400
4389800
11094745
Jan-09 4370300
484700
4556000
11060937
Jan-08 4390400
387900
4610500
11036008
Jan-07 4436800
418400
4564100
0 2000000 4000000 6000000 8000000 10000000 12000000

Population

TOTAL POPULATION INACTIVES UNEMPLOYED POPULATION WORKING POPULATION (15+ AGE)

Inactive – neither employed nor unemployed people in education, training, retired, illness, etc
As per the graph, the number of Inactive are more than the number of working population. This
is because of Austerity measures.
Greek economy went off the rails in 2009 with a large fiscal deficit, an external current account
deficit, drop in productivity and jump in public debt. Because of this, the country pushed away
potential investors which substantially hurt the growth potential of the Greek economy leading
to more migration of adults (Age: 15 – 65 years). The unemployment rate kept increasing till
January 2013 after 2008-09 crisis.

CPI (CONSUMER PRICE INFLATION)

• CPI Measures changes in the price level of market basket of consumer goods and
services purchased by households.
• The annual percentage change in a CPI is used as a measure of inflation.
• The annual inflation of Greece has been recorded to be increased by 0.9%
• The CPI has been reduced by -1.8% in July 2018 compared to June 2018. In the year
2017, it was recorded to be -1.7%.
9|Page

Weights of inflation
60.00

10.00

-40.00

May-12
May-10

May-11

May-13

May-14

May-15

May-16

May-17

Jan-18
May-18
Jan-10

Sep-10
Jan-11

Sep-11
Jan-12

Sep-12
Jan-13

Sep-13
Jan-14

Sep-14
Jan-15

Sep-15
Jan-16

Sep-16
Jan-17

Sep-17
Food inflation rate 3 Alcoholic beverages and tobacco
Clothing and footwear Housing
Durable goods, household appliances and services Health
Transport Communication
Recreation and culture Education
Hotels,cafés,restaurants Miscellaneous goods and services

There has been an increase in the prices of

• Transportation
• Communication
• food inflation
• hotels, cafes and restaurants
There has been a decrease in the prices of
• Clothing & Footwear
• Durables
• Alcoholic beverages.

Monthly inflation growth with regard to core inflation

8

-2

-4

-6
May-09
Sep-09

May-10

May-11

May-12

May-13

Jan-14
May-14

May-15

May-16

May-17

May-18
Jan-09

Jan-10

Sep-10
Jan-11

Sep-11
Jan-12

Sep-12
Jan-13

Sep-13

Sep-14
Jan-15

Sep-15
Jan-16

Sep-16
Jan-17

Sep-17
Jan-18

core cpi growth cpi growth

Core Inflation reflects the relationship between the prices of the basic products and the
buying power of the consumer.
The core inflation refers to calculation of overall consumer price index excluding:
I. Food and Nonalcoholic beverages
II. Alcoholic beverages
III. Tobacco and energy prices
If we observe in the year 2015, core CPI has been more than CPI, which continued till the year
2016. From the year 2017, CPI has been more than Core CPI and has continued till the year
2018.
10 | P a g e

If the core inflation is lower, the Federal Bank of Greece wouldn’t consider doing anything,
but if the core inflation is higher than inflation The Federal Bank will increase the rates and
other contra-dictionary monetary policies.
Core inflation is important to study because if your income doesn’t go up at the same rate, then
you are losing buying power as prices rise.

30
Monthly inflation growth with regard to main
20
inflation parameters
Food inflation rate Transport Hotels,cafés,restaurants Communication

10

-10
Jan-11
Jan-09

Jan-10

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18
Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18
Monthly Inflation with regard to main Inflation Parameters
The main inflation parameters for CPI of Greece include:
• Transport
• Food Inflation
• Hotels, Cafes and Restaurants
• Communication
Of all the parameters, Transport has a higher range of changes in its graph. In the year 2018, it
has been on the positive side, but has increased up to 4.9%. Transport has been the highest
contributor amongst the parameters for inflation. The second factor is food inflation, which is
seeing a steady increase. Cost of Food has increased up to 1.5% in the month of July in 2018.
 11 | P a g e

MONETARY AND FINANCE

1) KEY CONTRIBUTORS FOR LOAN GROWTH

Key Contributors for Loan Growth

3,50,000
Loan Growth (Million Euro)

3,00,000

2,50,000

2,00,000

1,50,000

1,00,000

50,000

0
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Time Period (2008 - 2018)

General Government Other financial intermediaries

Non-financial corporations Individuals and private non-profit institutions
Insurance corporations

In 2009, IMF helped Greece to bail out. Around265 Billion/ million dollars it helped. During
these years, there is an increase in loan growth. The key contributors for Loan Growth are
Individual & private non – profit institutions and General Government (as it has taken heavy
loan from IMF).

2) POLICY RATE WITH LOAN GROWTH

Policy Rate with Loan Growth

20.00 3.5
15.00 3
10.00
Loan Growth (%)

2.5
Policy Rate (%)

5.00
2
0.00
1.5
-5.00
1
-10.00
-15.00 0.5

-20.00 0
Jun-14
Jul-11

Jul-16
Jun-09
Jan-09

Nov-09
Apr-10

May-12

Nov-14
Apr-15

May-17
Aug-13
Sep-10
Feb-11

Dec-11

Mar-13

Jan-14

Sep-15
Feb-16

Dec-16

Mar-18
Oct-12

Oct-17

Time Period (2009 - 2018)

Loan Growth Policy Rates

12 | P a g e

Since crisis to 2012, there was a drastic fall in loan growth because of decrease in Inflation
during these periods. When the inflation decreases, there will be a decrease in policy rates as
well. Policy rates and loan growth are indirectly proportional, i.e. the loan growth reduces with
the increase of policy rates or vice versa. Currently Greece exited from the bail out after 10
years of its crisis, finally free from Austerity measures.

PUBLIC FINANCE
Revenue vs. Expenditure
Revenue vs Expenditure
30000

25000

20000

15000

10000

5000

0
2016-Q1* 2016-Q2* 2016-Q3* 2016-Q4* 2017-Q1* 2017-Q2* 2017-Q3* 2017-Q4* 2018-Q1*

Expenditure Revenue

The revenue vs expenditure chart suggests that for the second, third and fourth quarters for
the year 2016, the revenue and expenditures have been increasing. This is due to impact of
support to financial institutions was greater than the impact of corresponding expenditures.
This is due to the fees accruing on interbank lending guarantees, bond loan schemes, and
revenues from preference shares. For the remaining quarters expenditures were higher than
the revenues.
13 | P a g e

As Percentage of Revenues

100%

80%

60%

40%

20%

0%
2016-Q1* 2016-Q2* 2016-Q3* 2016-Q4* 2017-Q1* 2017-Q2* 2017-Q3* 2017-Q4* 2018-Q1*

-20%

Market Output Other Subsidies Taxes on Production and Imports

Property Income Current Taxes on Income Net Social Contributions
Other Current Transfers Capital Transfers

Under revenues, the primary contributors are taxes on import (26%- 39%), taxes on income
(14% to 26%) and net social contributions (22% to 36%). Net social contributions consist of
payments made to the general government for the benefit of their employees, accident, injury,
sickness benefits, family allowances, pensions, unemployment insurance, etc.
As Percentage of Expenditure

100%
Gross Capital Formation
Capital Transfers
80%
Adjustment for the Change in Pension
Other Current Transfers
60%
Social Benefits
Current Taxes on Income
40%
Property Income

20% Subsidies Payable

Other Taxes on Production

0% Compensation of Employees
Intermediate Consumption

-20%

The government expenditure is primarily towards compensation of employees 16% to 27%

and social benefits 28% to 47%.
14 | P a g e

Central Government Debt (As a Percentage of GDP)

Central Government Debt as Percentage of GDP
70000 100
90
60000
80
50000 70
40000 60
50
30000 40
20000 30
20
10000
10
0 0
Q1-2010
Q2-2010
Q3-2010
Q4-2010
Q1-2011
Q2-2011
Q3-2011
Q4-2011
Q1-2012
Q2-2012
Q3-2012
Q4-2012
Q1-2013
Q2-2013
Q3-2013
Q4-2013
Q1-2014
Q2-2014
Q3-2014
Q4-2014
Q1-2015
Q2-2015
Q3-2015
Q4-2015
Q1-2016
Q2-2016
Q3-2016
Q4-2016
Q1-2017
Q2-2017
Q3-2017
Q4-2017
Q1-2018
GDP Debt as Percentage of GDP

The Central Government Debt has shown a fairly increasing trend from Quarter 1 2014 to
Quarter 1 2018. The increase has been from 30,859 Million Euros to 41,968 Million Euros.
The primary contributing factor is accounts payable which accounts for around 34% to 79%
from Quarter 1 2010 to Quarter 1 2018.
Short Term Loans are also a major contributing factor from Quarter 1 2014 to Quarter 1 2018.
Short Term Loans have shown an increasing trend from 2.42% to 32.38%.
The short-term loans were granted by the EU to allow to meet a huge payment to European
Central Bank (4.2 Billion Euros) and International Monetary Fund and ever since they have
increased their borrowing of short term loans in order to clear their previous debts.
15 | P a g e

External Debt (As a Percentage of GDP)

External Debt as a Percentage of GDP
70000 460

60000
440

50000
420

40000
400
30000

380
20000

360
10000

0 340
2013 Q4

2016 Q3
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3

2014 Q1
2014 Q2
2014 Q3
2014 Q4
2015 Q1
2015 Q2
2015 Q3
2015 Q4
2016 Q1
2016 Q2

2016 Q4
2017 Q1
2017 Q2
2017 Q3
2017 Q4
2018 Q1
GDP Gross External Debt

The Greek external deficit has reached in 2008 the historically high 14.8% of GDP and was
sustained through recession at 11.1% of GDP in 2009 and 10.5% in 2010. Financing these
deficits has led to gross external debt’s large increase which in Q3 2010 was above 190% of
GDP. The external debt as a percentage of GDP is 800% in the year 2018 Quarter 1.
16 | P a g e

Index of Industrial Production

Index of industrial production is the index which deals out with the various parameters such as
Manufacturing, Mining, Electricity and water supply etc., there are core industries involved
which contribute for the IIP index namely Consumer goods (durable and non-durables),
Intermediate goods and capital goods.
Usage of Base year: Base year is used as a benchmark in the measure of the business activity
or economic index.
Impacts of IIP:
• A low IIP implies a lower production in the industrial sector which can be detrimental
to the growth of the economy and vice versa.
Comparison of over all IIP values 2010-2017
96.00 94.995
95.00 94.307
INDEX OF INDUSTRIAL

94.00
PRODUCTION

93.00 92.441
92.00 90.900
91.00
90.00 89.510
88.685
89.00 87.768
88.00
87.00
2010 2011 2012 2013 2014 2015 2016 2017 2018
YEARS

The above graph showing the overall comparison of the IIP values of Greece taking the
weighted average of all the major contributors’ sector wise IIPs. There is a steep decline in the
IIP of Greece from 2010 till 2014 this is because of the reasons that Greece despite of having
good earning capabilities because of their unwanted spending and heavy tax lavations from the
corporates people are not willing to start and produce more from Greece as home and as soon
as Greece has experienced economic bail out and because of the rigors austerity reforms
adapted by the economy the production by industries started increasing back from 2014 which
can be seen clearly.
For the above years of IIP calculation the base year being 2010 which has a value of 100 and
in contrast to that the IIP index have been dropped down to 87 points by 2014 and raised to 94
points by 2017 and is now showing the growing trend till July 2018 tracking.

Key contributors of IIP:

Coming to the key contributors of IIP as per the previous reports and the trends the following
are the major contributors for IIP
1.Mining and quarrying
2.Manufacturing
3.Electricity
4.Water Supply
And when it comes to the industrial goods
1.Energy
2.Intermediate goods
3.Capital goods
17 | P a g e

4.Consumer durables and non-durables played a major role.

2-digit contributors include:
1.Basic pharmaceutical products
2.Extraction of crude petroleum and natural gas
3.Basic metals
4.Coke and refined petroleum products
5.Computer electronics and optical products
6.Beverages
7.Machinery and equipment
Key Contributors of IIP – 2017
In the context of Greece in the recent years there in no sector of IIP which is found predominant,
we can say almost all the areas have covered equal chunk of share to the IIP and GDP
contributions.

The above pie chart tells about the Greece major 4 IIP contributors for the year 2017, by
observation Manufacturing and Water supply are the major contributors of IIP for Greece.
IIP key contributors

IIP Contributors in June 2017 & 2018

200.00
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00

Jun-18 Jun-17

The above graph represents the monthly comparison of the level 2 contributors of IIP in Greece,
by observation there is a considerable rise in the year of 2018 because of the entry into the IMF
treaty and liberalized trade policies.

Key Contributors for IIP - 2017

27% 20%

27%
26%

Mining and Quarring Manufacturing Electricity Water Supply

18 | P a g e

This is the schematic illustration showing the annual growth rate from all the core sectors of
IIP as mentioned above from Jan 2011 to May 2018.By observation we can say that there is a
steep increase in the growth rate of electricity during 2017 Jan – March which is due to the
withheld of the power generation major from the hands of government undertaking to private
and also the installed capacity of power generation is 18.5% less than the required to cater
needs of the population.

IIP VS MANUFACTURING
When a comparison is drawn between the total manufacturing in Greece and its influence on
the IIP index and economy the graph shows something like this which is like either a rise or
fall of the manufacturing IIP shows the incremental rise or fall in the total IIP.

IIP vs Manufacturing
250.00

200.00

Manufacturing
150.00

100.00

50.00

0.00

IIP Manufacturing
19 | P a g e

Balance of Trade
balance of trade
8,000.0

6,000.0

4,000.0

2,000.0

0.0

-2,000.0

-4,000.0

-6,000.0

Imports Exports Trade Balance

Balance of trade is trade deficit from the year 2004-2018 we can interpret that their imports are
more than their exports and majority of their trading happens between the European countries
like Germany and Italy because Greece will also come under the European Union.
From the above chart we can also infer that their exports are not affected by any economic
instability in the country. And they were trying to reduce their trade deficit over their period.

Top five exporter commodities

Greece exports increased from year on year to EUR 2.94 billion as of July 2018 and an average
of EUR1.751 billion from 2004-2018 their major exports contribute to minerals (mineral oils,
mineral fuels and products of their distillation) and i.e. around 64% continued by aluminium
(11%),

Top 5 exports in 2017

8%
8%
9%
11% 64%

Minerals Aluminium and articles thereof

Machinery Pharmaceutical products
Plastic products

Top five Imports of 2017

20 | P a g e

Top 5 Imports in 2017

10%

12%

51%
13%

14%

Minerals Machinery
Ships, boats and floating structures Pharmaceutical products
Electronics

Minerals itself constitute of around 51% and the remaining materials they share almost equal
proportions around 14% machinery (these machineries are those which are generally used for
refining of minerals),13% by ships, boats and floating structures, 12% Pharmaceuticals and
10% contribute to electronics.

Top five exporter country

Top 5 Export partners

13%

30%

17%

20% 20%

Italy Germany Turkey Cyprus Bulgaria

For Greece as it is a European nation majority of trade will generally happen between
European nations and if we see the pie chart Germany is the highest with 30%, Italy by 20%
and they together contribute around 50% and followed by Turkey and Cyprus.
They are the largest producers of perlite in 2010 and they produce 1% of world bauxite

Top five importer partners

21 | P a g e

Top 5 Import Partners

17%
27%

17%

20%
19%

Germany Italy Russian Federation Korea, Republic of Iraq

In importing also majority is contributed by the European nations Germany by 27% and Italy
by 20%, European nation together contribute by 47%, Russian federation by 19%, Korea
republic by 17% and Iraq by 17%.
Exchange rate
Chart Title
1.6 9

1.4 8

7
1.2
6
1
5
0.8
4
0.6
3
0.4
2
0.2 1

0 0
Jul-12

Jul-17
Jun-10

Jun-15
Nov-10
Apr-11
Sep-11

May-13

Nov-15
Apr-16

May-18
Mar-09
Aug-09
Jan-10

Aug-14
Feb-12

Dec-12

Mar-14

Jan-15

Sep-16
Feb-17

Dec-17
Oct-08

Oct-13

EUR/USD EUR/TRY

Exchange rate will tell you about how strong the currency is with respective to the USD For
Greece the currency is EUR and the EUR is followed by 19 other nations also Greece country
itself cannot influence the EUR but if any European nation is not doing good the currency
might fall and this will impact the other nations also so avoid this European Union will come
at this situation and they will support the nation by giving some financial aid and making some
austerity reforms in the nation. In the above graph the blue line indicates the EUR/USD
exchange rate and the orange line indicates EUR/TRY the steep up in EUR/TRY is because
TRY(Turkey) as the economy went down.
22 | P a g e

External Indicators
FOREIGN DIRECT INVESTMENT AND FOREIGN PORTFOLIO INVESTMENT
35000 1,20,000

Foreign Portfolio Investment (Million Euros)

30141
99,904 1,00,000
Foreign Direct Investment (Million Euros)

30000 28130
27140
23884 80,000
25000 22486 22119
18951 60,000
20000 18743
17750
40,000
15000
20,855 19,778 20,000
10000 6,583 6,978 8,348 9,623
0
5000 -16,428 -20,000
-22,664
0 -40,000
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Time
DIRECT INVESTMENT (Million Period (2008 -2016)
Euros) PORTFOLIO INVESTMENT (Million Euros)

The FDI (foreign direct Investment )is an investment made by a firm or individual in one
country into business Interests located in another Country if we observe our chart there is fall
in FDI from Jan 2010 as the economy went down during that time and the FDI started raising
from the year 2014 as there is 4billion investment from the international market and the
austerity reforms showed a development in the economy in the Greece.
When Greece was offered its first bailout by the Euro Union in January - 2012 the entire world
expected better production and increased activity in the country. Moreover, when a country
receives bailout it utilises the said amount to cover the CAD deficit. When the CAD is served
the amount of money in the economy rises which may lead to interest rate correction. So
naturally expecting higher interest return foreign investors started flooding the market.
Later when they realised that Greece government used much of the bailout amount to pay off
the earlier interest obligations many of them started to retrace back their investments. This
complemented with higher unemployment and high tax-rates lead to lower per capita income
and hence decreased demand. When the production in a country falls FDI generally flows out
of the economy.

Monetary and financial Policy

Policy rates

POLICY RATES
6

5
Lending Rates

0
Jul-10

Jul-15
Jun-08

Jun-13

Jun-18
Nov-08
Apr-09
Sep-09

May-11
Dec-10

Nov-13
Apr-14

Dec-15
May-16
Aug-12

Aug-17
Jan-08

Feb-10

Mar-12

Jan-13

Sep-14
Feb-15

Mar-17

Jan-18
Oct-11

Oct-16

Time Period (2008 - 2018)

23 | P a g e

The policy rate is the key lending rate of the central bank in a country. The central banks use
this policy rate as their main tool to control the inflation in the market. lending rates came
down in Greece from 2008 year from 5% to around 2% from the year 2008 to 2009 and from
the year 2009 it continues to be dovish market and by the year 2018 the lending rate has got
flattened to almost zero percent lending rate.