While many Greeks are worried about whether they’ll have a job – or find one – and others are scrounging for food because of austerity measures that have put 1.35 million people out of work, the country’s crushing economic crisis is so severe that even the rich are cutting back, at least in Ferraris.
According to Reuters, only one of the super-expensive luxury sports cars was sold brand new in Greece last year, compared to 21 new and 37 used in 2007, just before the country’s fiscal problems began. A used Ferrari was also bought.
The good news was that Greece’s current account deficit narrowed last year to its lowest level since the country joined the euro, a positive indicator offsetting the bad news of falling tax revenues caused primarily by big pay cuts, tax hikes and slashed pensions. The gap narrowed by 73 percent in 2012 to 5.58 billion euros ($7.45 billion), helped by falling imports and lower interest payments after a sovereign debt cut, the country’s central bank said.
The bank gave no breakdown on the extent to which import cuts reflected less purchases of machinery by Greek firms, a bad sign for crumbling investment levels and chances of a much needed revival in exports such machines could produce, Reuters noted. The current account deficit shrank to 2.9 percent of Gross Domestic Product (GDP) in 2012 from 9.9 percent the previous year – its lowest level since at least 1999, according to available data.
“The pace of the adjustment was impressive last year,” said Nikos Magginas, an economist at the country’s biggest lender, National Bank of Greeece. The current account balance is a key measure of how competitive a nation’s economy is and of whether it is living within its means. The reading had deteriorated during a debt-fuelled economic boom to a record deficit of 14.7 percent of GDP in 2008.
But a severe economic contraction, partly due to austerity measures as part of the country’s international bailout, has narrowed the gap and may eliminate it in 2014, according to government estimates. The government of Prime Minister Antonis Samaras is continuing to impose austerity on the orders of international lenders putting up $325 billion in two bailouts.
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