Investment in the Greek economy plummeted more than 60 percent between 2007 and 2015, according to data published in Eurobank’s weekly bulletin on Tuesday.
According to the lender’s economists, fixed capital investment declined by 40 billion euros or 66.1 percent during the period in question. At the same time, Greece’s gross domestic product, or GDP, fell 56.7 billion euros. The Eurobank document described the drop in investment since 2007 as “deep and prolonged.”
The reduction in investment was mainly felt in the housing market (23.8 billion euros), followed by machinery and equipment (12.1 billion) and other types of construction (2.3 billion).
Eurobank said some of the key reasons for the dramatic slide in the amount of capital being invested in the Greek economy were the increases and frequent changes in taxation, the rising cost of capital, the reduction in lending by banks, the rise of uncertainty, an inability to create an investor-friendly environment despite some progress in this area, and expectations of weak economic activity.
The lender also notes that net fixed capital formation, which measures gross investment minus depreciation, has been in negative territory since the end of 2010. The most recent data show that the annual shortfall is close to 11 billion euros.
To underline how damaging the last few years, and the collapse in investment described earlier, have been for the Greek economy, Eurobank’s weekly report pointed out that unemployment in December 2007 was at 8.1 percent, meaning there were just 403,000 people out of work. By the end of 2015, the jobless rate had risen to 24.2 percent, with 1.1 million people without work. During this eight-year spell, 860,000 jobs disappeared.
Looking at the same period, bank deposits nosedived from 198 billion euros to 122 billion, a fall of 76 billion euros.