The Vicious Circles of Recession and Development Prospects

Almost four years after Greece's entry to a financial support programme, the Greek economy is still facing recession. The aim of this article is to analyse the interconnections between five vicious cycles of recession and highlight the country's development prospects. The five vicious cycles of the Greek economy are as follows: a) fiscal, b) internal devaluation, c) financial, d) psychological, and e) sociopolitical. These five vicious circles of recession must be seen in parallel with the adjustment policy applied. The results of this policy have created the preconditions for the maintenance of the recession. Also, other deficits of the adjustment policy and structural weaknesses of the Greek economy continue to limit the prospects of recovery for the Greek economy. We conclude with certain suggestions that might enable Greece to overcome the major obstacles to economic development.