After a dense fortnight of reports, assessments and evaluations that was sealed by a successful exit of Greece to the markets, one is the common denominator: the Greek economy has at least for the next five years a “free corridor” of growth in conditions of fiscal stability under the condition that there will be no serious escalation in the Middle East or other unforeseen negative developments in the turbulent geopolitical environment. And under one strong condition: That reforms will be implemented in critical areas – from taxation, to the justice system, health, competition and the labor market.

This is the common conclusion of all the reports and estimates published in the previous fortnight by the International Monetary Fund, the rating agency Standard & Poor’s, foreign investment houses and Greek institutes, such as IOBE, and it was confirmed by the markets with an 11-fold overhang of the issuance of the Greek 30-year bond last Wednesday.

GDP: Growth of 2.1% this year and 1.9% in 2025 is predicted by the IMF, IOBE “sees” this year’s growth rate at 2.1%, while S&P estimates that the Greek economy will grow at an average rate of 2.4% the five-year period 2024-2027. Despite the downward revisions in some cases (such as that of IOBE) these are growth rates significantly higher, up to twice, than the corresponding ones predicted for the eurozone countries. According to information, an average growth rate of 2.5% for the period up to 2027 will also be predicted by the Ministry of Finance in the updated Stability and Growth Program that it is going to send to Brussels.

Surplus -Debt: The IMF forecasts primary surpluses consistently above 2.1% of GDP from this year to 2029, a budget deficit below 1.5% of GDP for the next five years, and a reduction in public debt to 138.8% of GDP in 2029 from 168.8% in 2023. S&P estimates that Greece’s fiscal performance remains strong and that the medium-term target of a primary surplus of 2.1% of GDP will be reached this year, marking the end of Greece’s post-pandemic period of fiscal consolidation . The company foresees an improvement in the fiscal course for the coming years as well.

Thorns: On the other hand, inflation and the current account balance remain as focus of risks in the highlights of international and domestic houses and organizations. One of the “vulnerable” points of the Greek economy is still the current account deficit, S&P reports, despite its noticeable improvement last year (mainly due to the decline in energy prices) to 6.4% of GDP from 10.3 % in 2022. For the period 2024-2027, the deficit will remain (on average) at 5.4% of GDP, according to the American rating agency, which characterizes the high level of inflation in our country. For inflation, the IMF predicts it will decrease to 2.7% this year and to 2.1% in 2025, while IOBE has revised upwards to 3% (from 2.8%) its new estimate for 2023 pointing out that price increases in Greece are higher than the eurozone average.

What are the reforms that international organizations and foreign companies expect from Greece?

  • The complete exit of the Financial Stability Fund (TFS) from the systemic banks with the sale of the last package it owns in the National Bank and the treatment of the problems that still remain in the non-systemic banks.
  • The strict application of measures to arrest tax evasion and curb the underground economy through the digitization of procedures and controls. S&P considers the connection of cash registers with POS in all sectors of the economy to be a critical measure in this effort.
  • Judicial reform. International organizations estimate in their reports that the long delay in administering justice, in addition to other serious side effects for society, burdens the investment environment.
  • The reform in the health sector, competition and the functioning of the markets, as well as the full utilization of the funds of the Recovery Fund, are considered by rating agencies and international organizations to be of critical importance for the Greek economy in the coming years.