The forecasts of the Ministry of Economy for the growth rate of the Greek economy for 2024 and 2025 amount to 2.2% and 2.3% respectively, while relevant downward revisions are noted compared to the previous forecasts (2.5% and 2, 6% respectively), mainly due to lower than expected economic growth in the EU.
Greece’s growth rate is expected to be significantly above the Eurozone average
However, it is worth noting that Greece’s growth rate is expected to remain significantly above the Eurozone average. Specifically, this rate is estimated at 0.8% for 2024, according to the spring forecasts of the European Commission, with the performance of the first half of 2024 being slightly lower at 0.6%.
At the same time, while inflation is stabilizing, energy, service and food prices remain volatile. In the MDS 2024, inflation for 2024 is forecast to decrease to 2.8%. The above downward trend in inflation is also supported by current data. More specifically, according to the latest data from ELSTAT, average inflation slowed to 3% in the first half of 2024 from 5.1% in the first half of 2023. For 2025, inflation is expected to continue falling to 2 .1%, in line with the forecasts of FY 2024. For the next years until 2028, inflation is predicted to stabilize at 2.2%–2.3%.
As noted by the Greek National Statistics Agency, for 2024 and according to the spring forecasts of the European Commission, the HICP in Greece is predicted to be higher (2.8%) than the Eurozone average (2.5%), with 2025 being the year where they will converge to the lowest level of 2.1%. Compared to the EU average, the Greek economy is going through a period of stronger inflationary pressures.
The EDS notes that the MDS 2024 forecasts for growth and the reduction of inflation are in line with those of the EU and are within the range of forecasts of both international and national organizations.
The labor market, in the medium term, remains resilient, with employment growing, albeit at a slower rate of 1.2% in 2024 and 0.8% in 2025, and unemployment falling. However, key sectors of the Greek economy, such as tourism, construction and agriculture, have begun to report increasing vacancies and labor shortages. Skill mismatches and low participation rates create barriers to utilizing parts of the available workforce.
Despite the high level of unemployment and good employment prospects, there are indications that the path of the labor market will likely remain limited due to market fragmentation. Nominal wages of dependent labor are expected to increase, albeit at a slower rate. However, they remain at a level that exceeds inflation, mainly due to rigidities in the labor market and increases in both the minimum wage and public sector wages.
Medium-term planning is done with an emphasis on fiscal stability so as to ensure a satisfactory reduction of the public debt in the coming years. Of course, there are also uncertainties related to external and internal risks.
In particular, geopolitical tension in the wider region, the possible slowdown of Northern European economies, increasing demands due to climate change and demographics may create challenges in the implementation of economic planning.
In conclusion, in an environment of great geopolitical uncertainty, the growth prospects of the Greek economy remain positive for the period 2025-28, with the main driver being the investments financed by the Recovery and Resilience Fund (REF), the strengthening of disposable income and the maintenance the dynamics of private consumption.
The acceleration of structural reforms in the markets of goods, services and labor is deemed necessary, in order to strengthen productivity and stimulate the competitiveness of the Greek economy.
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