Economic crisis & private sector

What is economic crisis? A situation in which the economy of one or multiple countries experiences a sudden downturn. Usually the supply of money is outpaced by the demand of money.

Forms of economic crisis Banking crisis (When a bank suffers a sudden rush of withdrawals by depositors) Speculative bubbles and crashes (A speculative bubble exists in the event of large, sustained overpricing of some class of assets) Wider economic crisis (A coexistence of different financial aspects)

Causes of economic crisis Easy credit conditions (encouraged high-risk lending/borrowing practises) International trade imbalances Real-estate bubbles Fiscal policy choices (relative to government revenues/expenses)

Consequences of economic crisis Falling GDP (Gross Domestic Product) Drying up of liquidity Rise of prices

What is the private sector? The part of the economy that is run by private individuals or groups and is not controlled by the state.

Private sector in Greek economy Mostly small to medium businesses unable to produce at high rates. Minor involvment in GDP Minor cause in the erupted economic crisis

Results of crisis in Greek private sector Low-productivity businesses closed. (mostly family businesses) Insufficient funds/raw materials businesses tend to minimize leading to future closure. Rise in unemployment of more than 25% over the first 12 months reaching high 40%->50% during the current period.

Positive aspects on private sector due to economic crisis Higher productivity from remaining businesses Minimum wage decrease led to hiring people willing to produce at that level. Better quality (?) & more controlled price market (?)

CHARTS

Domestic credit to private sector (%)

Greece business confidence