At 2.3% is expected to reach development of the Greek economy this year according to current forecasts of the Bank of Greece (BCT).
Growth, however, will fall to 2.0% in 2026 and is marginally accelerated to 2.1% in 2027, according to the BoG. These growth rates are higher than the average of the eurozone, contributing to the gradual convergence of Greece’s real GDP per capita to the average EU level.
The main component of growth is expected to be consumed, while investment and exports will continue to contribute positively. The immediate impact on GDP of Greece by imposing duties are estimated, as the US is not an important market for Greek exports of goods, representing a share of less than 5% on total exports in 2024. The impact on Greece will be mainly indirect, with a major increase in the increase in the increase in the external demand.
Inflation based on the harmonized consumer price index (ETK) will continue to decline over the next three years. In 2025 it is expected to be 2.5%, reflecting the insistence of inflation of services, mainly due to the expected increases of working fees and rents and pressure from high tourism demand. The core of inflation will remain high, showing a significant divergence from the average eurozone and partially reflecting the positive productive gap of the Greek economy. However, it is expected to be significantly reduced to 2.2% by 2027, due to the decline in mainly the inflation of non -energy industrial goods.
Dangers and uncertainties
The risks surrounding the Bank of Greece’s forecasts for growth are mainly downward. More specifically, risks to the short -term prospects of the Greek economy are:
- The further increase in protectionism in international trade and more important of the expected slowdown in the eurozone economy,
- The strongest negative effects on the global economic environment, international financial conditions and the energy market from generalized uncertainty and acute geopolitical tensions,
- The greatest narrowness in the labor market and potential higher wage pressures,
- Possible natural disasters associated with the effects of climate crisis,
- Lower than the expected rate of absorption and utilization of funds of the recovery and durability mechanism
- The slower of the expected implementation of the necessary reforms, with adverse effects on the productivity of the Greek economy.
Challenges
Despite the remarkable successes and durability shown by the Greek economy in recent years, there are still obstacles and challenges that are suspended in the country’s growth dynamics.
The business environment in Greece is burdened by the relatively burdensome and often changing regulatory and administrative framework that lacks transparency and a legal system that is not considered effective and protective of ownership rights.
Regulatory barriers, underlying economy and limited access to funding, especially for small and medium -sized enterprises, continue to hinder competition, private investment and increased productivity.
Skill mismatches, low training results, basic skills lag and lack of appropriate incentives discourage people from looking for work and limiting innovation.
Proposals
In order to address the challenges related to domestic structural weaknesses, as well as the uncertainties associated with the global economic environment, and to ensure the stability and durability of the Greek economy, the following policy reforms and interventions are proposed.
Ensuring public debt viability must remain a priority of fiscal policy.
For this reason, compliance with European fiscal rules is crucial.
At the same time, the planned early repayment of the residual amount of the loans of the first financial adjustment program, using the cash cash, will help the faster decline in public debt compared to the existing medium -term target, will lead to a reduction in enhance debt viability.
On the other hand, budgetary reforms are also needed that make fiscal policy more friendly. Priority in this area are reforms aimed at enhancing the effectiveness and social justice of the tax system and improving the quality and efficiency of public spending.
Timely absorption and disbursement of RRF resources to the private sector is crucial to achieving the projected rates of investment growth in the period 2025-2026. Effectively utilizing European resources will help to accelerate green and digital transition, which will enhance the medium -term growth of the Greek economy.
In addition, additional efforts are needed to improve the business environment and move to an economy of medium and high intensity technology. A key priority are reforms that enhance productivity, such as simplifying regulatory regulations for businesses, the basis of domestic credit and capital markets, enhancing innovation and improving the effectiveness of the state.
Reforms aimed at simplifying the regulatory framework for businesses could include bureaucracy reduction actions, restricting obstacles to entry and exit from the market, improve spatial planning and simplifying land use processes.
Reforms that enhance innovation, research and development (R&D) and digital transformation should focus on providing targeted tax incentives for R&D, increasing public funding for R&D, expanding the digital transformation of the public and private sector. Interconnecting research with businesses, especially with industry, is catalytic for the production of innovation.
In terms of improving state efficiency, key priorities are the strengthening of infrastructure and the rule of law, as well as the acceleration of the administration of justice.
At the same time, an effective financial mediation system increases the mobilization of savings resources from domestic and foreign sources, contributes to more efficient distribution of loan capital and leads to increased investment.
In this context, further improvement in the quality of banks’ assets is needed and new net inputs of non -performing loans should be avoided. In addition, it is very important to differentiate the sources of funding, by utilizing the new microwave fund, as well as access to alternative forms of funding through capital markets.
A proper labor market and a larger and better trained workforce can immediately increase not only production through higher labor inflows, but also productivity, redistributing workers to developing sectors and businesses faster, which can thus better use new technological opportunities.
The key priorities are to upgrade human capital by improving the education system and the reform and extension of the unemployed training programs, the incentives to participate in the workforce, mainly of women, young people, but also older people, and the repatriation Employees, especially those with valuable skills.
Since domestic savings is not sufficient to cover the required investment, it is urgently necessary to continue attracting foreign direct investment (ASA). Significant impetus to the LCE could also come from the faster implementation of the privatization and utilization program of public property. However, a crucial factor in investment is to maintain macroeconomic, fiscal and political stability.
Increasing investment over time also requires the increase in private sector savings. To this end, the third pillar of the insurance system, namely private insurance, as well as the promotion of financial alphabetism, could contribute to this.
Finally, given Greece’s dependence on fossil fuels, more investments in renewable energy and upgrades to the electricity network are urgently required. In the same context, additional actions of energy cost restriction, such as enhancing energy interconnections with neighboring countries, increasing the capacity of electricity networks, as well as the review of regulated charges and high taxation.
Rearmeu 2030
The global economic environment is becoming increasingly uncertain, with increasing challenges, continuous reversals and acoustic geopolitical tensions. In this context, the EU should remain united, enhance the coordination between its Member States and deepen economic cooperation and unification.
Rearm Europe Plan/Readiness 2030, as well as investment in infrastructure and critical new technologies (competitiveness compass and European Commission Agreement), constitute a radical change in the degradation of European politics, contributing to the European Competitiveness and Agreement, They give a huge impetus to the European economy, increasing its flexibility and resilience to external disorders.
At the same time, the completion of the Banking Union in areas related to crisis management and the foundation of a European deposit insurance system, as well as the creation of a European Union of savings and investment, will ensure economies of scale and smooth flow of investment across the EU.
At the same time, however, the very successful experience of NextGenerationeu should be exploited to promote the issuance of a common secure asset in euro (Eurobond) on a permanent basis. The above actions will strengthen the European economy and boost the international role of the euro as an alternative reserve currency.