Just as the Greek government has declared the country’s recession, now in its sixth year, will recover by the end of the year, thanks to international bailouts and harsh austerity measures, comes a warning that the crushing economic crisis isn’t over yet.
Joerg Asmussen, an executive board member of the European Central Bank, said in an interview with Germany’s Sueddeutsche Zeitung that despite considerable progress, Greece has lost more than 20% of its Gross Domestic Product since the start of the Eurozone debt crisis nearly four years ago.
“This is something we have in Europe last seen after the fall of the Iron Curtain in some transition countries,” he said. The ECB, along with the European Union and International Monetary Fund make up the Troika of Greece’s international lenders putting up $325 billion in two rescue packages of loans.
Asmussen said that a number of states in the Eurozone’s periphery are still suffering from weak economies and fiscal challenges, despite recent progress. Spain’s finances continue to be bogged down by an overburdened health system, he said. He also praised Portugal for having “done many things right, but the economy continues to shrink.” He noted that Portugal’s development is also closely linked to the recovery of its neighbor Spain.
Meanwhile, German Finance Minister Wolfgang Schaeuble continues to have reservations about a Cyprus bailout, putting pressure on negotiations between euro- zone countries, the European Commission and the ECB, the newspaper reported, citing government sources.
Cyprus made a request for a bailout in the summer of 2012, but Germany and other Eurozone countries have expressed concerns about suspected money laundering involving Russian account holders in the country, among other issues. As opposed to previous statements from Asmussen, Schaeuble insisted that Cyprus, whose GDP represents 0.2% of the Eurozone GDP, is not systemically relevant for the euro zone, the newspaper reported.