Greece: An Economic Tragedy in Six Charts

Paolo Mauro (PIIE) and Jan Zilinsky (PIIE)
February 10, 2015

Greece's economy has spiraled downward since 2009, at great human cost. A newly elected government headed by Prime Minister Alexis Tsipras is demanding relief from its reform and restructuring program. How did Greece arrive at this situation?

The country's descent into its difficulties is narrated and visualized through six charts, focusing on the severity of the economic recession and compression of government expenditure, as well as the increase in the public debt and its shift from the hands of the foreign private sector to the foreign official sector.

This video is part of an effort by the Peterson Institute for International Economics to invigorate its dissemination of reliable economic data and analysis to the broad public on important issues of general interest.

Text and narration: Paolo Mauro
Charts: Jan Zilinsky
Animation and sound: Daniel Housch and Jeremey Tripp

Data Sources and Methodological Note

All data used for the charts in this video are drawn from the World Economic Outlook database posted by the International Monetary Fund (IMF). The first chart uses several vintages of the database, as indicated in the video. All subsequent charts use the October 2014 vintage.

Viewers familiar with the Greek fiscal deficit and expenditure data published by Eurostat and European Commission publications may notice differences between such data and those published by the International Monetary Fund. Such differences, which become sizable in 2012 and especially 2013, stem from methodological differences, the most important of which relates to how government support to the banking system (equivalent to about 3 percent of GDP in 2012 and more than 10 percent of GDP in 2013) is recorded. Such support is included as part of government expenditures under Eurostat's methodology, whereas it is excluded under the methodology used by the IMF. Of course, both institutions keep track of these amounts, but the "headline" concept they emphasize is based upon different methodologies. An advantage of including government support to the banking system as part of overall expenditures and the deficit is that it facilitates the consistency of fiscal flows (the deficit) and stocks (the debt). To simplify: If the government spends to support the banks, government debt will go up. An advantage of excluding government support to the banking system from overall expenditures and the deficit is that those concepts will be less affected by one-off operations, and will reflect more closely the public goods and services provided to citizens. To sum up: Which concept is more appropriate depends on the specific question at hand.