Huge drop in disposable income within eight years
Disposable income has shrunk dramatically in Greece over the course of the crisis, dropping by over a quarter within eight years, a special report by the Organization for Economic Cooperation and Development (OECD) shows, but last year it posted a temporary rebound, as the economy’s prospects appeared briefly to improve.
From 2007 up until the first quarter of this year, the per capita disposable income sank 27.5 percent as consumers saw their spending capacity decline, which also led to a drop in expenditure and savings.
The income losses were contained last year when there was a notable increase in the gross domestic product per capita, disposable income, spending and consumer confidence. Greece is now anticipating the figures for the rest of this year, as they will reflect the impact of the capital controls and the political uncertainty.
The OECD data showed a per capita GDP drop of 22.8 percent from 2007 to 2015, although there was a 2.1 percent recovery last year.
Disposable income has fallen 27.5 percent in the last eight years, but last year it posted a 4.4 percent rebound. Per capita consumer expenditure contracted by 20 percent from 2007 to 2015, but last year it rose 2 percent.
Social transfers (i.e. various allowances and benefits) increased 6.2 percent, of which 3.4 percentage points came during last year alone.
Consumer confidence was just 0.7 percent lower in 2015 than in 2007. It bottomed out in late 2011 and early 2012, just before the agreement for the PSI debt restructuring and the second bailout agreement when it had fallen by 5.2 percent.
There has also been a clear declining trend in savings too: The OECD showed the savings rate at +3.2 percent in 2007, and at -11.1 percent at end-2013.
By the first quarter of this year the rate had come to -6.8 percent, which means that households did not just stop saving but they also ate into their deposits.