The report just published by the Pissarides Commission shows that, during the 2010-19 period, which roughly corresponds to the protracted economic crisis that hit Greece, the country underinvested by €130 billion and saved €125 billion less that it would have if its investments and savings were comparable to the eurozone average.
The Commission, a group of academics and business executives headed by the Cypriot-British Nobel Prize-winning economist Sir Christopher Pissarides, was set up in January to devise a growth plan for the country.
The report describes a web of interconnected weaknesses – underinvestment, low savings, low export orientation and low productivity – that were certainly exacerbated by the crisis, but existed beforehand. It calls for a radical reorientation of the economy in which growth in investment, production and savings are given priority over consumption.
Fixed investments, as a percentage of gross domestic product, significantly lagged throughout the 2010-19 period compared to the eurozone average; this lag was 7% of GDP each year. Cumulatively, the underinvestment was €130 billion.
This amount is higher than previous estimates; the Hellenic Federation of Enterprises (SEV), for example, estimated last decade’s investment gap at 100 billion.
“In 2019, Greece is the EU’s laggard in fixed investments – just 11.4% of GDP, compared to an EU average of 21.3%,” the Pissarides Commission report says.
On savings, the report notes that they declined throughout the first three years of the crisis and, since 2013, have turned negative, as Greek households were obliged to use their savings to cover basic consumption and debt payment needs. But even before the crisis, productive investment was growing at consistently low rates: Investment from non-financial firms averaged 7.5% of GDP, compared to a 12.4% EU average.
Greece is also the fifth lowest exporter in the EU, as a percentage of GDP, and bottom among the smaller countries.