The Greek economy is projected to maintain its robust momentum, and expand by 2.3% in 2025 and 2.2% in 2026, thanks to sustained consumption and EU-funded investment growth. Inflation is expected to moderate to 2.3% by 2026, with strong wage and demand developments still putting pressures on consumer prices. Greece achieved a significant budgetary surplus in 2024, which is set to be sustained over the forecast horizon. Helped by robust nominal GDP growth, the debt-to-GDP ratio continues to fall and is expected to reach 140.6% in 2026.
| Indicators | 2024 | 2025 | 2026 |
|---|---|---|---|
| GDP growth (%, yoy) | 2,3 | 2,3 | 2,2 |
| Inflation (%, yoy) | 3,0 | 2,8 | 2,3 |
| Unemployment (%) | 10,1 | 9,3 | 8,7 |
| General government balance (% of GDP) | 1,3 | 0,7 | 1,4 |
| Gross public debt (% of GDP) | 153,6 | 146,6 | 140,6 |
| Current account balance (% of GDP) | -8,3 | -8,2 | -7,9 |
Economy maintains momentum despite headwinds
In 2024, Greece's economy expanded by 2.3%. This was largely fuelled by private consumption, investment and the buildup of inventories. Despite the contractionary fiscal stance, the increase in domestic demand was strong and implied a significant rise in imports, whereas exports grew at a slower pace. Hence, net exports weighed on economic activity.
With the progress of the recovery and resilience plan, EU-funded investments are expected to be significant in 2025 and 2026. Together with sustained robust consumption, supported by steady income growth, these are expected to be the main drivers of economic growth. Import demand is set to remain strong, given the high import content of investment. Overall, GDP growth is set to continue exceeding its long-term potential, with rates of 2.3% in 2025 and 2.2% in 2026. The Greek economy is expected to be only mildly affected by the U.S. tariffs due to its relatively weak direct and indirect trade links with the United States. However, risks to the growth outlook increased and are tilted to the downside, as a persistent increase in trade and geopolitical uncertainty together with the deterioration of the global economic outlook could weigh on Greek exports, especially tourism.
Tighter labour market and sustained wage growth
The labour market improved in recent years, and favourable momentum carried over to early 2025 as evidenced by a further decline in the unemployment rate in February to 8.6%. Following a peak in the first quarter of 2024, vacancy rates have begun to decrease, but still indicate a tight labour market, particularly in sectors related to tourism and those requiring high skills. Employment is set to keep expanding, although at a slower pace as skills gaps and low labour market participation, especially among women, limit labour supply. Against this background, real wages per employee are set to rise further, on average by 1.3% per year over the forecast horizon. This is also supported by recent minimum wage increases and a reduction in social security contribution.
Inflation to remain above the euro area average
Headline inflation averaged 3% in 2024, 0.6 pps. above the euro area average. Disinflation has been constrained by accelerating services prices and the uptick in electricity prices. Looking forward, wages are set to continue exerting upward pressure on prices. Hence, services inflation is expected to slow down only gradually over the forecast horizon. Overall, inflation is projected at 2.8% in 2025 and 2.3% in 2026. Inflation excluding energy and food is forecast to remain higher, at 3.5% and 2.6% in 2025 and 2026, respectively.
Stronger fiscal outlook driven by structural gains
In 2024, the general government balance significantly outperformed expectations and recorded a surplus of 1.3% of GDP, compared to a projected deficit of 0.6% of GDP in the Autumn Forecast. This improvement was driven by subdued growth in current expenditure, stronger-than-anticipated direct tax revenues, and robust receipts from social security contributions, associated not only with solid employment growth but also with measures to combat tax evasion and undeclared work, such as the digital labour card and stricter reporting requirements for VAT returns.
In 2025, the general government surplus is expected to narrow, reaching 0.7% of GDP. On the revenue side, the forecast reflects the higher baseline due to the stronger-than-expected revenue performance in 2024 and accounts for the rise in the overnight stay tax in hotels, structural measures to combat tax evasion, the extension of the digital labour card to the food and tourism sectors, aimed at reducing undeclared work and the increase in local government fees. These measures are expected to offset the impact of the planned 1 pp reduction in social security contribution rate and the increase in public sector wages. On the expenditure side, the projections incorporate a new package of measures, worth 0.5% of GDP, announced after the publication of the 2024 fiscal outcome, including a refund of one month’s rent with income criteria, a permanent social benefit of EUR 250 to low-income pensioners, uninsured elderly, and persons with disabilities, and a EUR 500 million annual increase in the national investment budget.
In 2026, the general government surplus is projected to rise to 1.4% of GDP under a no-policy-change assumption. This improvement is expected to be supported by continued growth in tax revenues and social security contributions, which are expected to offset the rising expenditures on pensions and public sector wages. The fiscal stance is projected to be expansionary, supported by EU funding, both in 2025 and in 2026.
The public debt-to-GDP ratio is projected to continue to fall to 146.6% in 2025 and 140.6% in 2026. The decline is set to be driven by nominal GDP growth as well as the budget surpluses.