What lies behind Greece's economic rise

Which global economy will perform best in 2023? The answer may be surprising, given that the economy has underperformed Greece in the past. In a recent statement, the International Monetary Fund praised not only Greece's "digital transformation of its economy" but also its "increasing market competition."

When many people think of Greece, they think not only of the erudite Socrates and Aristotle, not only of the ancient myth of Zeus, but also of a failed state in deep debt crisis. Greece faced a serious debt crisis at the end of 2009, the government fiscal deficit and public debt as a proportion of GDP reached 12.7% and 113%, far exceeding the EU rules of 3% and 60% of the upper limit, is one of the "stupid pig" five countries.

However, times have changed, and what is unexpected is that the failed state of the past has now turned around. Not only did it pay off the last of its 1.9 billion euro bailout loan in June 2022, two years ahead of schedule, it also became the world's best-performing economy this year. Recently, the Economist, an authoritative British magazine, released a ranking of countries' economic performance in 2023. The publication collects data on five economic and financial indicators for 35 major rich countries - inflation, "inflation breadth," GDP, employment and stock market performance - and ranks them according to each of these indicators. Greece topped the list, followed by South Korea, the United States in third place, Canada in fourth and Chile in fifth. More importantly, this is the first time Greece has topped the list since last year.

Not only has Greece performed well in the past two years, but its future prospects are also viewed favorably by many institutions. A recent report by Capital Economics shows that Greece will continue to outperform the eurozone economy as a whole over the next two years, and the country's public debt will decline. Despite recent growing concerns about public finances in some eurozone countries, the outlook for Greek debt is quite bright. Steady economic growth, large primary surpluses and low interest payments will keep the debt ratio on a downward trend over the next few years.

Indeed, in October, international rating agency Standard & Poor's announced that it had upgraded Greece's credit rating by two notches from BB+ to BBB- (A-3), returning it to investment grade. In December, Fitch, another international rating agency, also upgraded Greece's credit rating to investment grade (BBB-). This shows that the international market is expecting and affirming the positive development prospects of the Greek economy.

So how did Greece turn itself from a failed state into one of the top economic performers? This achievement is largely due to the Greek government's implementation of deregulation and structural reforms aimed at improving the business environment. These measures include the following four aspects:

The first is to slash the civil service and cut government spending. At the onset of the debt crisis in 2010, public servants accounted for 25% of the country's total employment, and as a result, many public sector inefficiencies were straining the state's finances. Subsequently, Greece took decisive measures, laid off 400,000 civil servants, cut civil servants' salaries by 40%, and merged government departments in order to reduce government expenditure and improve administrative efficiency. Second, massive privatisation. The Greek government has achieved remarkable growth through the full or partial privatization of state-owned enterprises, infrastructure and real estate assets, facilitated by the Asset Development Fund of the Hellenic Republic. Third, we should carry out tax reform to reduce the tax burden on taxpayers. Fourth, vigorously introduce foreign investment.

Efforts to reduce bureaucracy, reduce regulations, cut taxes and promote competition among businesses have proved successful in attracting foreign investors and spurring economic growth. It is these factors that have made Greece the "most unlikely champion" in recent rankings of the world's most successful economies. In the face of Europe's continued economic malaise, perhaps the "Greek experience" is the best option to break the bottleneck.