GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2025
National Productivity Board. 2025. | ISSN 2732-9305 (Print) ISSN: 2732-9313 (Online)
Greece is among those EU countries where the real GDP grew faster (2.3%) than the euro area (EA) and the European Union (EU27) averages (0.85% and 1.02%, respectively) during 2023-2024. In addition to lower unemployment and a higher labor force participation rate, the economic activity in the country has been considerably boosted by gains in efficiency, higher-quality investment, and increased capital productivity compared to previous years. Specifically, in 2024, compared to 2023, slight improvements are observed in all productivity metrics reported here, including labour productivity in terms of GDP per worker (1%) and GDP per hour worked (0.77%). To the contrary, the EA19 and the EU27 presented zero or negative productivity growth, and very small productivity growth, respectively, between 2023-2024. The rates for labour productivity in terms of GDP per worker were 0% and 0.29%, and in terms of GDP per hour worked -0.16% and 0.34%, respectively.
Regarding the coming years, the productivity of the Greek economy is expected to grow, with a total increase of 2.3% in terms of GDP per worker and 2.0% in terms of GDP per hour worked in 2026, compared to 2024. The corresponding productivity growth in the EA19 and EU27 is expected to be slower than in Greece during the same period (2024-2026), namely, 1.6% and 1.2% in terms of GDP per worker and 1.3% and 0.6% in terms of GDP per hour worked, respectively. However, these improvements cannot lead to a substantial convergence with Europe. In particular, in 2024, the Greek GDP per worker remained at about 52% of the EA average and 57% of the EU average, while the Greek GDP per hour worked was even lower, namely, 46% of the EA average and 40% of the EU average. These productivity gaps are expected to remain basically the same during 2025 and 2026.
The total factor productivity (TFP) in 2024 grew by 1.1% compared to 2023, and its upward trend also remains modest and stabilised. From 2022 to 2024, capital intensity contributed only marginally to labour productivity growth, showing stagnation or underutilisation of new capital and the need to improve the quality of investments to translate them into tangible productivity improvements. Moreover, capital productivity shows signs of normalisation, with a growth of 1.5% in 2024, signifying the more efficient use of physical capital in the production process, which can lead to higher overall economic growth and help mitigate the effects of labour shortages. These productivity trends underscore the need to expedite the implementation of broad-based reforms that strengthen domestic productive capacity and correct the structural imbalances that have long constrained sustainable growth and the country’s resilience to external economic shocks.
The ongoing fiscal consolidation, the reduced debt-to-GDP ratio and the sizable surplus, which is attributed to both the public expenditure reduction (by 1.5 pp of GDP from the previous year) and the public revenue increase (up by 1.1 pp of GDP), would facilitate investment in technology and innovation in strategic sectors (e.g., raw materials and agriculture, defense, clean energy, and bio-economy) to reduce dependence on imported capital goods. This would also enhance education and vocational training systems to equip the workforce with the skills needed in high-tech manufacturing and other advanced sectors.
Greece exhibits a pronounced decline in government effectiveness and remains below both its pre-crisis levels and the EA average. During 2007-2023, it is positioned among the countries with the highest levels of public expenditure (as % of GDP) and notably low levels of public sector performance. This persistent gap suggests structural weaknesses in public administration service delivery, policy implementation, and the inefficient management of public expenditure. Policy efforts should emphasise strengthening public financial management by adopting outcome-based budgeting, enhancing transparency, and reinforcing accountability in the allocation and use of public resources.
Regarding R&D efficiency, Greece demonstrated an upward trend during the last decade, strengthening its national R&D ecosystem, which is underpinned by significant public sector funding and an expanding R&D workforce. However, it continues to lag behind the EU27 and EA20 averages in terms of the R&D intensity and GERD per inhabitant, while the business sector remains under-engaged. This is reflected in lower levels of business R&D intensity and a comparatively smaller share of R&D personnel and researchers. While scientific output relative to R&D expenditure – measured via publications and citations – is comparatively strong, the conversion of knowledge into patents and high-tech exports remains notably weak, with Greece ranking near the bottom among EU member states on these indicators. The relatively high share of R&D personnel in higher education institutions, coupled with the low engagement of the business sector in R&D activities, points to an innovation ecosystem that is heavily academic and public sector-driven but less integrated with private sector innovation and commercialisation.
As far as digitisation is concerned, despite the significant efforts of the Greek economy during the last few years, and, particularly, after the COVID-19 outbreak, Greece lags considerably behind most EU partners in digital competitiveness. According to the IMD World Competitiveness Ranking (2025 edition), Greece’s digital competitiveness improved by 3 ranks (compared to the 2024 edition), to the 49th position among 67 economies and 23rd among the EU26 (except Malta). Furthermore, according to the Digital Economy and Society Index (DESI), while the digitisation of the public sector has moved forward, Greece ranks 21st and 22nd in the digital public services for citizens and business, respectively.
Greece has also lost ground in overall competitiveness and ranks 50th among 69 economies globally, and 22nd among the EU26 member states that are included in the IMD World Competitiveness Ranking (Malta is not included). The most ground was lost in business efficiency, where Greece dropped 9 places (to 53rd, down from the 44th place in 2024 edition) and three places compared to the EU26 (now ranking 20th, down from 17th in the 2024 edition). It has also lost ground in economic performance (at the 22nd position, losing one rank), while it remained at the same rank in government efficiency (22nd) and infrastructure (40th) compared to the EU26. Greece’s weakness in government and business efficiency, coupled with weak institutions and heavy regulation, hampers its ability to attract both domestic and foreign direct investment, resulting in low business productivity, low overall production and exports, and low digital competitiveness.
According to the Government AI Readiness Index, although Greece ranks 16th in the technology sector in the EU27 and 22nd in the data and infrastructure pillar, its weak performance (26th) in the government pillar (including vision, governance and ethics, digital capacity, and adaptability) pulls the overall rank down to that same rank (26th). Greece not only falls back in the ranking of the government pillar, but its score, which improved between 2020-2023, worsened in 2024. Based on the OECD, Greece performs very well in AI publications, as it is ranked 5th in terms of AI publication percentage (12.7%) and 12th in the number of AI publications.
Emphasis should be given to digital technological skills in employee training and attracting foreign highly skilled personnel, along with the reversal of the ‘brain drain’. Scientific research legislation should also be improved to encourage innovation and to reform the legal environment to better support development and technology application. Greek companies need to become more agile and improve their ability to use big data and analytics to support decision making and to adequately address cybersecurity issues. Finally, Greece participates with “Pharos”, one of the first thirteen AI “factories” in Europe and aims to create synergies with related EU initiatives supporting the digital transformation, including the European Digital Innovation Hubs (EDIHs), Data Spaces, and National Competence Centers (NCCs).
In Greece, significant rates of value added growth in manufacturing in recent years have generated a small improvement in the share of manufacturing in the Greek GDP. Based on the most recent relevant data, the share of manufacturing value added in GDP stands at 8.7% in Greece versus 14% on average in the EU. This fact means that there is still much ground to cover to achieve convergence, as envisaged in the corresponding National Industrial Strategy target for year 2030 (share of up to 15%). The National Industrial Strategy and Action Plan for Greece aims to facilitate the digital transformation of industrial enterprises, supporting the green transition, developing human resources and skills, enhancing the business environment, and improving the resilience of the Greek industrial sector.
The implementation of the Strategy receives significant support from funds committed through the RRF. More particularly, key reforms pursued in the framework of the RRF concern the digitalisation of procedures, the spatial planning of industrial parks and other sectoral activities, and a new investment-friendly regulatory framework for carbon capture, utilisation and storage to balance the CO2 emissions of heavy industrial facilities. Furthermore, flagship structural investment programmes for industry funded through the RRF include the “New Industrial Parks”, the “Smart Manufacturing”, and the “Produc-e Green” programmes. In the framework of the EU’s new defence strategy, reforms in the domestic defence industry encompass the Hellenic Center for Defence Innovation and the revision of Greece’s National Defence Industrial Strategy to promote the country’s defence industry capabilities and to encourage international synergies.