Following a 3.5% contraction in 2010, GDP fell nearly 7% in 2011. About 600,000 jobs were lost. As a result, the unemployment rate jumped from 9.5% in 2009 to more than 21% in December 2011. The unemployment rate among young people is now more than 50%...[A]bout 105,000 businesses failed in 2011. An additional 60,000 enterprises are forecast to go out of business this year.
The problem is that massive, short-term budget cuts could also make it harder for the country to resolve its long-term deficit if it impedes economic growth. Packard believes “the imposition of harsh fiscal austerity was badly timed, triggering a collapse of the Greek economy with little gain in deficit reduction relative to the pain.”
But Greek officials have continuously committed to such measures — promising to bring spending down to 5 percent of GDP — as a condition for its now-lengthy succession of bailouts, which at this point have made the country “a financial ward of Europe,” as the New York Times’ Landon Thomas writes. The worry is that the timing of these austerity measures could make it even harder for Greece to get back on its feet.