Greek Economic Growth Forecast

By Lefteris Papadimas

ATHENS (Reuters) – The Greek government is forecasting economic growth of 2.3% in 2025, outperforming Europe’s major economies, thanks to strong tourism revenues, robust consumer spending, and investment, as outlined in a 2025 draft budget released on Monday.

Greece, recovering from a debt crisis that nearly led to its exit from the euro zone in 2015, projects a 2.2% rise in economic output for this year.

The government has revised down its previous growth estimate from 2.6% in April, citing a stagnating European economy, a critical source of investment and tourism, combined with persistent high inflation.

These estimates align with Athens’ fiscal plan, submitted to the European Union for approval. However, the draft budget indicates risks from conflicts in Ukraine and the Middle East, along with potential new geopolitical tensions.

More than half of Greece’s foreign direct investment originates from northern European countries, while two-thirds of exports, including agricultural goods, fuel, and pharmaceuticals, go to the EU.

The draft budget anticipates increased spending of approximately €3.5 billion next year and includes tax breaks to finance pension hikes and support vulnerable households. This will be funded by a projected larger primary budget surplus of 2.5% of GDP next year, up from 2.4% in the current year — a crucial element for maintaining sustainable public debt, which currently stands at the highest ratio to GDP in the euro zone.

Since exiting a bailout in 2018, Greece has regained investment-grade ratings, revitalized its banking system, and solely relied on debt markets for borrowing. However, the unemployment rate remains at 10%, and the average monthly salary is 20% lower than it was 15 years ago.

Public debt is expected to decrease by five percentage points to 149.1% of GDP in 2025 from 153.7% this year.