The OECD’s semi-annual Economic Outlook predicts that the Greek economy will grow by 2% this year and 2.5% in 2025, fueled by rising employment, real wages, and robust tourist activity, which boost consumption. Despite a slowdown in new job creation, employment rates and labor shortages remain historically high. Wage growth reached 5.5% in Q4 2023, with the minimum wage increasing by 9.4% in April 2023 and 6.4% in April 2024.
The report anticipates that investments will be supported by the absorption of funds from the Recovery and Resilience Fund and the continued improvement of bank resilience, despite tight financial conditions. Inflation is expected to continue declining, reaching 2.1% in Q4 2025.
With a forecasted primary surplus of 1.8% of GDP in 2022 and 2.1% in 2025, efforts to reduce public debt are underway, with an estimated decrease to 151% of GDP by 2025. The OECD highlights the importance of economic growth and further progress in combating tax evasion to bolster public revenues.
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The report mentions a reduction in the borrowing cost of Greek government bonds and a halving of the yield spread between Greek and German bonds as Greece regained investment-grade status.
Key challenges facing the Greek economy include strengthening productivity and fiscal adjustment due to high debt levels. Continuous and robust economic growth is necessary to continue debt reduction, alongside addressing issues such as low investment, an aging population, and climate change.
Increased productivity, currently one-third lower than the OECD country average, is crucial for creating a larger fiscal space and improving living standards. Progress in removing investment barriers, strengthening the justice system, and enhancing adult education are essential for boosting productivity.
