The Greek economy is projected to grow by 2% in 2024 and 2.5% in 2025, fueled by rising employment, real wages, and a strong tourism industry, according to a report from the OECD. Despite a slowdown in new job creation, the employment rate and labor force shortages are at historically high levels.
Wage growth saw an increase of 5.5% in the fourth quarter of 2023, with the minimum wage rising by 9.4% in April 2023 and an additional 6.4% in April 2024. The report also highlighted the absorption of funds from the Recovery and Resilience Fund and improvements in bank soundness as factors that will support investment, despite tight financial conditions, with a forecasted growth of 9% in 2025.
Inflation is expected to decline at a slower pace and reach 2.1% in the last quarter of 2025. The report predicts a primary surplus of 1.8% of GDP in 2024 and 2.1% in 2025, attributing this to the high public debt, which is estimated to decrease from 161% of GDP in 2023 to 151% in 2025. The growth of the economy and efforts to combat tax evasion are anticipated to increase public revenues.
The OECD identified boosting productivity and fiscal adjustment due to high debt as the main challenges for the Greek economy. Sustained and robust economic growth will be essential to reduce debt, address aging population challenges, and respond to climate change. Productivity growth, currently a third lower than the OECD average, has the potential to create more fiscal space and improve living standards.