With its economy on an austerity diet that has already caused a contraction of 18.4% over the past four years, Greece is on track to shrink another 4% in 2013, according to the International Monetary Fund (IMF). That could put Greece on the road to economic woes not seen since the Great Depression.
Bloomberg reported Monday that as Athens continues to try to shrink its debt level in accordance with bailout requirements, it’s headed for the largest cumulative loss of economic output in a developed country in at least thirty years—and, according to Washington’s Bureau of Economic Analysis, that loss could rival the 27% plunge the U.S. experienced during the Great Depression in the early 1930s.
“Austerity has been destroying tax revenue and therefore thwarting the intended effect,” said Charles Dumas in the report. Dumas, chairman of Lombard Street Research, a London-based consulting firm, continued, “There’s no avoiding austerity, though, because these people have no borrowing power. The deficits are there.”
In addition to economic woes, the danger rearing its head from the ’30s is the potential for political turmoil. The rise of the anti-foreigner Golden Dawn party, with its logo resembling a swastika, stirs echoes of the rise of Hitler in a debt-ridden Germany before World War II—particularly since the main opposition group in Greece is Syriza, which takes some inspiration from Marxist policies. The comparison is evocative of the similar positions of Nazis and Communists in Weimar Germany.