With the possibility of default continuing to loom over its head, Greece's economic future seems particularly dire.

A recent vote in favour of austerity measures staved off, for now, the possibility of the country going bankrupt, but it could still happen, and the development would likely set off a chain of events that could push Greece out of the European Union and rock global markets.

But some observers suggest there is hope for the beleaguered country, which has a number of promising economic sectors that could be reformed and built upon.

Yanis Varoufakis, professor of economics at the University of Athens, told CBC News that that is exactly what should happen. Austerity measures only saddle the country with more debt, he said, while the default would allow Greece to begin fresh. 

"There have to be many reforms and changes, but basically we could [reform] if this vicious debt spiral is killed. It has to be killed dead in its tracks," he said.

But the country's debt crisis is only part of the problem. The economy itself is in desperate need of reforms, according to analysts. Greece is facing a fifth year of recession in 2012, and its economy shrank a massive seven per cent in the fourth quarter of 2011 compared with a year earlier.

University of Guelph economics professor Thanasis Stengos said that the main issue with the Greek economy is that it must produce more goods more efficiently.

"It is imperative that resources are redirected in the more productive parts of the economy (agriculture, light manufacturing and tourism) where Greece has a comparative advantage," Stengos said via email.  

A 60-page report released last November by the renowned consulting firm McKinsey & Company agrees, while identifying a slew of problems with the Greek economy.

"It became clear from the debt crisis that Greece had a flawed economic model," the report, entitled Greece 10 Years Ahead, states.

Among the problems laid out in the report, Greece severely lags in productivity and competitiveness compared to other European Union countries.

Greece also has Europe's lowest workforce participation rate — i.e. the number of employed and unemployed as a percentage of the entire workforce. Put it together and it means that "a relatively smaller percentage of Greeks work longer than their European peers to support a generally unproductive economic system."

But the problems don't end there. "Frustrating bureaucracy" and overregulation discourage investment, the report says. The public sector is large and inefficient, with many departments overlapping in responsibilities. For example, 13 ministries are involved in 27 tourism-related activities.

The report also suggests that the legal system is "cumbersome" and deters investment because of its "ambiguous, obsolete or contradictory" laws. Tax evasion is also rampant, with an estimated seven to nine per cent of the country's GDP lost because of it.

But the report proposes a new "National Growth Model" for the country over the next decade that would reignite growth and create 520,000 new jobs and 55 billion Euros in revenue over that time span.

The report focuses on five of the country's largest sectors: tourism, retail, manufacturing, energy and agriculture, which account for 42 per cent of economic output and 51 per cent of total employment.

"There are a number of areas where Greece cannot only do better but establish [itself]," Yannis Ioannides, an economics professor at Tufts University, told CBC News.

Here are some examples:

Taking advantage of human capital

"Greece's greatest advantage is its human capital — a highly educated workforce which is not being utilized and is idle and is being wasted," Varoufakis said.

"My worry is by the time we get to [fixing the debt crisis], our highly educated workforce will have migrated to Canada, or to Australia or Germany like they're already doing. This is why delay is deadly."

The McKinsey & Company report also found that businesses are hesitant to hire more workers because of inflexible legal requirements and collective labour agreements. There is also poor placement of young university graduates.

Tourism

Ioannides said tourism, which makes up 15 per cent of the country's economy, can improve in terms of "quality as well as quantity."

Ioannides said Greece's tourism must improve its competitiveness. He said Turkey, for example, is a major competitor, with its Mediterranean coast and antiquities, while offering packages at a lower prices.

The McKinsey & Company report also found that Greece needs to reform its "sun and beach" product by developing cruises and nautical tourism and building necessary infrastructure. The reforms, the reports estimates, could add 18 billion Euros annually by 2021.

Manufacturing

Manufacturing is the largest contributor to the Greek economy in terms of contributions to tax revenues and social security.

But it lacks scale, modern and productive capacity and innovation.

When it comes to food processing, the report found, Greece has "significant potential" to boost its output and exports in oils and fats, fruits and vegetables and dairy and bakery products, as the country has access to high-quality raw materials and produce. (Ironically, Greece only holds a 28 per cent share of the Greek feta market.)

It should prioritize export markets, the report states, increase its processing capacity by developing more processing and packaging facilities and establish the "Greek Foods Company." The private or public-private partnership company would pool production of small and medium production facilities and develop wholesale and retail networks in export markets.

These measures and others could add 120,000 more jobs to the economy by 2021, the report states.

Rising stars

The McKinsey report also identifies six rising economic sector stars that "offer the possibility of significant future growth."

These are manufacturing of generic pharmaceuticals, aquaculture, medical tourism, elderly care, regional cargo hub development and waste management.

Generic pharmaceuticals

Greece appears committed to increasing its penetration of this market, as domestic and export sales show "great potential" for growth, according to the report. It suggests that with some changes, including a campaign that promotes generic drugs, product quality guarantees and further expansion of export markets, sales could increase to 2.2 billion in 2021 (from 1.2 billion in 2010).

Aquaculture

While still small in size, Greece's fish farming industry is growing at three per cent a year and exports 80 per cent of its production. (The country produces almost half of the world's output of sea bass and sea bream.)

The industry's competitiveness could be improved by expanding into Europe and broadening its products (mussels and larger, pricier fish like blue-fin tuna).

Medical tourism

Greece also has the potential to compete in the rapidly growing "middle market" of medical tourism, according to the report, but lacks a comprehensive national strategy and needed infrastructure. For example, the country has only one in-patient facility accredited by the international monitoring body Joint Committee International.

It should primarily focus on outpatient procedures, like eye surgery, cosmetics, fertility and create a strong brand and reputation as a medical tourism destination, the report states.

"There has to be a total aggregate approach to the development of the Greece economy," Ioannides said. "Has to be an approach that lifts everybody's spirits up."

With files from The Associated Press