Greece's economy is expected to continue to grow at a strong pace, with a projected expansion of 2.1% in 2025 and 2.2% in 2026, driven by steady consumption and investments supported by EU funds. GDP growth is set to moderate to 1.7% in 2027 as the RRF comes to an end. Inflation is expected to decline gradually, to 2.4% by 2027, as solid demand and the projected increase in energy prices will put an upward pressure on consumer prices. Unemployment is decreasing to levels not seen in more than a decade, but structural challenges remain. Greece’s fiscal outlook remains favourable over 2025-27, with broadly stable primary surpluses, despite the tax cuts and social measures. Strong nominal GDP growth and budget surpluses are set to keep the debt-to-GDP ratio on a downward trend, moving below 140% by 2027.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 2.1 | 2.2 | 1.7 |
| Inflation (%, yoy) | 2.8 | 2.3 | 2.4 |
| Unemployment (%) | 9.3 | 8.6 | 8.2 |
| General government balance (% of GDP) | 1.1 | 0.3 | 0.0 |
| Gross public debt (% of GDP) | 147.6 | 142.1 | 138.0 |
| Current account balance (% of GDP) | -6.2 | -6.4 | -5.9 |
Economy shows resilience despite adverse conditions
In the first half of 2025, Greece's economy grew by 2% y-o-y, largely driven by private consumption and tourism. Investments picked up in the second quarter, especially construction and equipment investments.
Overall, the economy is expected to sustain its growth momentum in the second half of 2025 and throughout 2026. Investment activity is expected to remain robust in 2025 and 2026, supported by the double-digit growth in corporate lending and the implementation of the RRP. Additionally, a new package of expansionary fiscal measures is expected to boost net wage growth and private consumption. Import demand is set to remain strong, given the high import content of investments. Although no sharp cliff effect is expected, growth is forecast to slow after 2026 as the RRP implementation comes to an end. GDP growth is projected to be relatively stable, with rates of 2.1% in 2025 and 2.2% in 2026, before moderating to 1.7% in 2027. While the economy has so far demonstrated resilience to external challenges, a prolonged increase in geopolitical or trade uncertainty and financing costs could significantly weigh on exports, particularly in the tourism sector, and on investment activity.
Labour market keeps improving but challenges remain
The unemployment rate declined to 8.2% in October 2025, its lowest level since 2009, but remains above the EU average. After peaking in the second quarter of 2024, vacancy rates have eased slightly, although they still suggest a relatively tight labour market, particularly in the tourism and construction sectors. Employment is expected to continue growing, albeit at a slower pace due to structural issues, such as skill gaps and low participation rates, especially among women. Wages per employee are set to accelerate, with an average annual growth rate of 3.6% over the forecast period, driven in part by past hikes in minimum wages, a decrease in social security contributions and the recently announced personal income tax reform.
Inflation projected to ease gradually
After averaging 3.1% in the first half of 2025, headline inflation declined to 1.7% by October, driven by a decrease in the energy and services inflation. However, robust demand and a still-tight labour market are expected to maintain upward pressure on consumer prices. As a result, inflation is forecast to decline only slowly, reaching 2.8% in 2025 and 2.3% in 2026. While headline inflation excluding energy and food is anticipated to ease, the projected increase in energy prices is expected to keep inflation at 2.4% in 2027.
A solid fiscal position despite expansionary measures
The headline general government surplus is expected to decrease from 1.2% of GDP in 2024 to around 1.1% in 2025. This reflects a decline in the primary surplus from 4.7% to 4.3%, partially offset by reduced interest expenditure. This decrease mainly stems from expansionary measures (0.7% of GDP), including the 1 pp. cut in social-security contributions, higher public-sector wages, a means-tested rent refund, and a permanent EUR 250 annual benefit for vulnerable individuals. Additional pressures include higher healthcare and defence spending, and a financial correction related to EU agricultural subsidies equivalent to 0.2% of GDP. These effects are partly offset by increased revenue, supported by ongoing tax-compliance measures, the extension of the digital-labour card to new sectors in order to reduce undeclared work, and higher local-government fees.
In 2026, the budget balance is forecast to reach 0.3%, a reduction of 0.8 pps. compared to 2025. This corresponds to a primary surplus of 3.4% of GDP. This decline mainly reflects a recently announced expansionary fiscal package, estimated to cost 0.6% of GDP in 2026 and 0.8% of GDP in 2027. The package combines cuts in personal income tax, property tax and VAT, together with targeted increases in pensions and public sector wages. These measures are designed to alleviate cost-of-living pressures and provide support to lower- and middle-income households, families with children, pensioners and residents of small villages The forecast also incorporates higher defence expenditure, expected to rise from 2.4% of GDP in 2025 to 2.6% in 2026.
In 2027, the headline balance is forecast to decline to 0.0% of GDP, corresponding to a primary surplus of 3.2%. This deterioration in the headline balance mainly reflects higher interest expenditure, and the full-year impact of the new fiscal package.
The public debt-to-GDP ratio stood at 154.2% in 2024, 55 pps. below its peak in 2020. It is expected to decrease further, reaching 138% in 2027. The decline is set to be driven by nominal GDP growth as well as the primary budget surpluses.