OECD Economic Outlook, Volume 2025 Issue 2

Greece

GDP growth is projected to be 2.1% in 2025 and 2.2% in 2026, before easing to 1.8% in 2027 as strong investment growth moderates. The slowdown of investment is due to the phasing-out of disbursements of Recovery and Resilience funds, while consumption will remain strong, supported by employment gains and growing real wages. Exports are set to improve with a recovery in international demand. Headline inflation will ease slowly to 2.1% in 2027 amidst tight labour markets. Wage growth exceeding productivity gains, renewed extreme weather events, and the incomplete implementation of EU funds could dampen the outlook.

Sizeable primary fiscal surpluses from 2.3% to 2.9% of GDP are projected in 2025-2027. Keeping public debt on a firmly declining path should remain a priority as ageing costs and investment needs will remain high. Pursuing efforts to make regulations more business-friendly, reducing restrictions on professional services, and easing labour shortages, are key priorities to sustain strong growth and reduce further the public debt-to-GDP ratio.

Growth remains robust

The economy grew by 1.7% in the year to the second quarter of 2025, driven by investment, private consumption and net exports. Employment grew by 0.6% in the first half of 2025. High frequency indicators continue to point towards expansion in the second half of 2025. Inflation remained persistent at close to 3% in the third quarter of 2025, as services and food price increases outweighed lower energy prices, but declined sharply to 1.6% in October 2025. Labour shortages remain high as the unemployment rate fell to 8.2% in September 2025. Growth of wage costs strengthened to 8.7% in the year to the second quarter of 2025, up from 4.9% a year earlier.

Greece

1Gross public debt, Maastricht definition.

Source: OECD Consumer Prices database; and OECD Economic Outlook 118 database.

Statlink

Greece: Demand, output and prices

Statlink

Credit to businesses continued to expand as interest rates for new loans to non-financial corporations decreased from 4.7% in January 2025 to 4% in September 2025. Growth in tourism has been strong, with travel receipts over the first half of 2025 11% higher compared to the same period in 2024. Limited trade links are mitigating the impact of US tariffs, but US tariffs will also weigh on exports by lowering demand from trading partners, such as Germany. Interest rates on 10-year government bonds decreased by 5 basis points from January 2025 to October 2025, while the spread to German bonds fell by 19 basis points over the same period.

High fiscal revenues will support further debt reductions

The primary budget surplus is projected to remain sizeable at 2.3-2.9% of GDP in 2025-2027, in line with the government targets. Stronger-than-expected revenues underpinned a primary surplus of 4% of GDP in 2024 and created room for some additional spending. New fiscal measures amount to 0.7% of GDP in 2026, rising to 0.9% of GDP in 2027, mostly reflecting a personal income tax reform for employees, pensioners, farmers, the self-employed and families, increasing spending on defence and security, and new rental support from November 2025 onwards. Planned minimum wage increases, by 8% cumulatively until April 2027, will provide additional income support. Expenditure financed by Recovery and Resilience funds is projected to rise from 2.1% of GDP in 2025 to 4% of GDP in 2026 before being phased-out, which will moderate investment growth.

Growth will remain resilient

GDP growth is projected to remain resilient at 2.1% in 2025, 2.2% in 2026 and 1.8% in 2027. Growing disposable incomes, reflecting continued expansion of employment and rising real wages, will support consumption. Strong investment growth until 2026 is projected to slow in 2027 with the phase-out of the Recovery and Resilience funds. Export growth will pick up gradually as external demand strengthens. Headline inflation is projected to ease gradually amidst tight labour markets, returning close to target in 2027. Wage growth outpacing productivity gains, extreme weather events, or incomplete implementation of the Recovery and Resilience Plan “Greece 2.0” could dampen the outlook.

Reform momentum needs to be maintained to foster growth and reduce debt

Keeping the public debt-to-GDP ratio on a declining path remains key given the still high debt level and high future spending pressures, from high investment needs, climate change and population ageing. Sustained, strong growth will be needed to raise living standards and meet spending needs while reducing debt. With Greece’s population ageing, improving the business environment further and easing skills shortages are key priorities. Continuing recent measures to make the regulatory framework more business‑friendly would strengthen competition and boost investments. There remains scope to reduce regulatory burdens by formalising and accelerating the review of existing business regulations, ensuring an effective consultation of stakeholders on new legislation, and easing restrictions on professional services, notably notaries and lawyers. Strengthening vocational training, rebalancing labour market policies towards training and counselling for unemployed workers, while ensuring high training quality, would reduce skill mismatches and better meet firms’ labour needs. Improving access to childcare by shifting public spending from birth grants towards childcare facilities would help encourage female labour force participation.