The European Commission (EC) projects economic growth in Greece will settle at 2.2% for 2024 in its “Spring 2024 Economic Forecast” report, marking a slight decrease compared to its previous estimate of 2.3%.
For 2025, the report notes that Greek GDP is set to expand by 2.3%, while inflation is expected to drop by a substantial 2.4% in 2024, settling at 2.8% from 4.2% in 2023 with 2025 recording a further decline to 2.1%.
The EC stressed that in 2025 investment is expected to gain further momentum and become a key contributor to output growth, while household spending is likely to be further supported by a rise in real income.
In 2023, the labor market continued to strengthen on the back of solid economic activity, with the unemployment rate falling by 1.4 pps. to 11.1%. Despite still high unemployment, vacancy rates are rising, pointing to increasing labor market shortages in some sectors.
Despite energy prices falling further, the disinflation process came to a temporary halt in mid-2023 due to persistently high food inflation, which was exacerbated by the impact of floods and sticky services prices.
The public debt-to-GDP ratio declined to 161.9% in 2023 driven both by the increase in nominal GDP and the surplus of the primary balance. The ratio is expected to fall further to 153.9% of Greek GDP in 2024 and 149.3% in 2025, helped by increasing primary surpluses, nominal growth, and stock-flow adjustments related amongst others to the considerable proceeds from the Egnatia and Attiki Odos road concessions.
The fiscal outlook remains subject to risks. Downside risks stem from pending legal cases, most notably the litigation cases against the Public Properties Company (ETAD). Also, with the increasing minimum wage, wage pressures are building up in the public sector. On the upside, revenues could turn out higher than currently forecast due to the measures that aim to improve tax compliance.
