The Greek economy remains resilient and is expected to grow at a rate of 2% this year and 2.5% in 2025 as employment and real wage growth and strong tourism boost consumption, according to the OECD’s six-monthly report (Economic Outlook).

Despite the slowdown in new job growth, the employment rate and labor shortages remain at historically high levels, he underlines.

Wage growth reached 5.5% in the fourth quarter of 2023 on an annual basisnotes the OECD, with the minimum wage rising by 9.4% in April 2023 and further by 6.4% in April 2024.

The absorption of the resources of the Recovery and Resilience Fund and continued improvement in bank soundness will support investment, despite tight financial conditions, the report adds, with investment projected to increase 9% in 2025.

THE inflation it will continue to decrease, but at a slower pace and is predicted to fall to 2.1% in the last quarter of 2025.

The provision for primary surplus 1.8% of GDP this year and 2.1% in 2025 is appropriatedue to high public debt, the report says, which is estimated to fall to 151% of GDP in 2025 from 161% in 2023. The growth of the economy and further progress in the fight against tax evasion will boost public revenues.

The report says the cost of borrowing Greek government 10-year bonds fell by 100 basis points (one percentage point) in March 2024 from a year earlier and the yield gap between Greek 10-year bonds and their German counterparts halved as Greece regained investment grade.

The OECD emphasizes that the main challenges facing the Greek economy are the strengthening of productivity and fiscal adjustment due to high debt.

He notes that in order to continue reducing the debt, alongside the high spending that is necessary due to the low investment in the decade of the crisis, the aging of the population and the response to climate change, sustained and strong economic growth will be needed.

Productivity growth, which is a third lower than the OECD average, would simultaneously create more fiscal space and raise living standards.

A prerequisite for productivity growth is further progress in removing barriers to investment, notably by strengthening the justice system, reducing remaining barriers to the regulatory framework of retail and the liberal professions, and providing more and higher quality adult education.

The OECD notes that a large part of the public investment needed to support growth will have to be financed from the national budget after the end of the Development and Resilience Fund resources in 2026mainly by containing the expenditure on wages, reducing the fragmentation of public procurement, further promoting digitalisation and simplifying public services as well as expanding the number of taxpayers.

3.1% growth of the global economy

For the global economy, the OECD predicts that the growth rate will rise to 3.1% this yearthe same as last year, while in 2025 it will increase slightly to 3.2%, supported by stronger real incomes as inflation and interest rates decline.

For the Eurozone, growth will be anemic this year as well – 0.7% compared to 0.5% in 2023 – to strengthen in 2025 to 1.5%, while for the USA it predicts a GDP increase of 2.6% this year and 1 .8% in 2025.