THE STATE OF THE GREEK ECONOMY AT THE END OF 2025
ISBN: 978-960-341-158-1 e-ISBN: 978-960-341-157-4
The Greek economy is moving along a stable growth trajectory, with GDP growth reaching 2% in the third quarter of 2025 and the forecast for the whole year to be at 2.1%. Growth is driven by private consumption as well as the strengthening of fixed capital investment, supported by the Public Investment Program and the Recovery Fund. For the first time, a particularly strong leading role of investment relative to consumption is being observed. Fiscal indicators are improving impressively, with the primary surplus estimated at €5.27 billion for 2025 and public debt declining from 145.9% of GDP in 2025 to 138.2% in 2026. At the same time, early repayments of Greek government loans have been announced which, even if they originate from ESM reserves, are underpinned by the improvement in the fiscal balance.
Inflationary pressures persist (particularly in food and services), while rents recorded a sharp increase in the first half of 2025. Overall, inflation is expected to remain at anticipated levels, around 2.5%. Broader measures to address the housing problem are under consideration. The rise in real disposable income is continuous, but the pace of improvement is not sufficiently high to restore the losses, mainly those incurred during the memorandum period. Consequently, consumer confidence shows a negative trend, which is nevertheless expected to recover due to the expansionary fiscal measures scheduled to be activated in 2026, as well as the anticipated increase in wage costs. In the labor market, unemployment declined to 8.6%, while issues related to skills mismatches persist.
Regarding the external balance, improvement is recorded due to lower fuel prices and the rise in tourism; however, exports of goods face uncertainties, even though they are exceptionally resilient. The widening of Greece’s external balance of payments constitutes a key restraining factor for growth. Foreign Direct Investment is once again strong; also evident is the revitalization of the Greek industry’s position in the country’s productive system.
The main risks for the future concern geopolitical instability, climate change, the demographic problem, and major global debt imbalances.
Of particular importance, however, for the effectiveness of economic policy outcomes is the preservation of economic and political stability, as well as social cohesion and well-being, which are being tested primarily by the effects of the memorandum period and the multiple crises that followed. The assessment of the effectiveness of economic policy should be based on the progress being achieved, rather than on the distance from the illusory pre-crisis levels of prosperity (financed through borrowing). Nevertheless, it is entirely natural for citizens to set these levels as targets, and for economic policy to seek to approach them.
The reorganization of the European Union’s structural funds following the end of the post-Covid development intervention of the Recovery Fund will be linked to addressing Europe’s competitiveness challenges, and it is estimated that Greece can benefit as well through the organization of a new roadmap of interventions (Eurogroup direction) aimed at addressing the major problems of European integration.