Greece’s Economy Outpaces Eurozone with Strong Growth and Optimistic Forecasts

Greece continues to outperform both the eurozone and EU averages, according to the European Commission’s Spring 2025 Economic Forecast published Monday.

The report paints a positive picture of Greece's economic outlook, with steady growth, declining unemployment, and falling debt levels expected through 2026.

The Commission revised its 2024 growth forecast for Greece upward from 2.1% to 2.3%, citing strong domestic demand and EU-funded investment. This momentum is expected to continue, with GDP projected to rise by 2.3% in 2025 and 2.2% in 2026.

“Thanks to sustained consumption and increased EU-financed investment, Greece’s economy is projected to maintain its robust momentum,” the report stated. The Commission also noted that GDP growth will continue to exceed the country’s long-term potential.

Despite a challenging global environment and contractionary fiscal conditions, Greece’s economy grew by 2.3% in 2024. The main drivers of this growth were private consumption, investment, and inventory buildup. However, weaker export performance relative to rising imports meant that net exports weighed on overall economic activity.

Looking ahead, the implementation of Greece’s Recovery and Resilience Plan is expected to drive substantial investment in 2025 and 2026. Combined with stable income growth and solid consumption, this investment is forecast to sustain the country’s economic expansion. Import demand is also projected to remain high due to the import-heavy nature of investment spending.

Unemployment continues its downward trend, falling to 10.1% in 2024 and projected to decline further to 9.3% in 2025 and 8.7% in 2026.

Inflation, while gradually easing, remains a concern. Consumer prices in Greece are expected to rise by 3% in 2024, moderating to 2.8% in 2025 and 2.3% in 2026. “Strong wage and demand developments continue to put pressure on prices,” the Commission noted. Inflation across the euro area is expected to decline more quickly, reaching 1.7% by 2026.

Greece’s fiscal position has also improved significantly. The country recorded a notable budget surplus in 2024, a trend expected to continue through the forecast period. With nominal GDP growth remaining strong, the debt-to-GDP ratio is projected to decline to 140.6% by 2026.

While the overall outlook is positive, the Commission cautioned that risks remain. These include potential fallout from persistent global trade tensions, geopolitical instability, and a weaker international economic environment—factors that could impact Greece’s vital export and tourism sectors. Nevertheless, due to limited direct trade ties with the United States, the country is expected to be only mildly affected by recent U.S. tariff measures.

For Greece, the forecast underscores a sustained economic recovery built on domestic strength, strategic investment, and fiscal discipline, positioning the country as one of the eurozone’s more resilient performers in the coming years.

(Source: Amna)