The Greek economy is proving to be resilient in the unfavorable and uncertain international environment, it is pointed out in the final draft of the new budget submitted to the Parliament. And which foresees strong growth, an “explosion” of investment, a percentage increase in exports greater than that of imports, a de-escalation of inflation and a further reduction in unemployment.

In particular, the following are foreseen: GDP growth of 2.3% in 2025, from 2.2% in 2024 and 2.3% in 2022. Private investment is expected to increase by 6.7% in 2024 and 8.4% in 2025, from 6 .6% last year. The unemployment rate will decrease from 11.1% in 2023 and 10.3% in 2024 to 9.7% in 2025. While employment will increase from 1.2% last year and 1.1% this year, by 0.7% in 2025. GDP in nominal terms is expected to increase by around 10 billion euros in 2025 and the ratio of the General Government’s debt to GDP to decrease from 163.9% in 2023 to 154% in 2024 and further to 147.5% in 2025. While, a primary surplus of 2.5% of GDP is projected this year and 2.4% of GDP in 2025.

Inflation, from an average of 3.5% last year, is expected to rise by 2.7% this year and slow to 2.1% in 2025. Private consumption will rise from 2.3% in 2023 and 2 .2% this year to 2.3% in 2025. Public consumption, on the other hand, will be limited from 1.8% last year to 1.7% this year and to 1.6% in 2025. Exports of goods and services will increase from 1.9% last year, by 5.4% this year and by 4% in 2025. While imports of goods and services will increase from 0.9 % in 2023, by 4% this year and by 3.6% in 2025.

At the same time, the budget includes all the interventions that have been announced, including those presented at the Thessaloniki International Exhibition. New permanent fiscal measures affecting the regular budget result in additional fiscal costs in 2025 compared to 2024 of $1.1 billion. euros, while a number of other interventions are financed from resources of the public investment budget (national and co-financed section and Recovery and Resilience Fund – TAA). In this context, investment costs are expected to increase from 13.15 billion euros in 2024 to 14.1 billion euros in 2025, plus the resources of the TAA loan arm.

According to the Ministry of Finance, the above positive results for the Greek economy are achieved on the basis of fiscal prudence. At the same time, the welfare state is strengthened and a network of fiscal interventions is implemented, which improves the real income of citizens and reduces social inequalities.

The interventions are within the fiscal targets set in the Medium-term Fiscal-Structural Plan 2025-2028, as a 3.6% increase in net primary expenditure is foreseen in 2025 compared to 2024, while the relevant target amounts to an increase in expenditure up to 3, 7%. In this context, the primary result of the General Government is expected to be 2.5% in 2024 and 2.4% in 2025 and the total result to -0.7% in 2024 and -0.6% in 2025.

As pointed out in the budget, the new fiscal interventions, complemented by a series of institutional measures, focus on supporting disposable income, strengthening investment and innovation, addressing the demographic and housing issues as well as addressing the challenges of climate change. As well as in dealing with modern challenges, such as the demographic and housing problem, the climate crisis, but also to cover the necessary expenses for strengthening the Health system and the National Defense.

In more detail, the text of the new budget states the following:

The real growth rate in Greece is forecast to rise to 2.3% in 2025 from 2.2% in 2024 and 2.3% in 2023, boosted, in terms of domestic demand, by the stronger investment drive, the further rise in employment and incomes and the steady growth of consumer spending.

The growth potential in Greece is expected to remain significantly higher than the European average, driven by investments, private consumption and export activity. 2025 is forecast to be Greece’s third consecutive year, after recovering from pandemic GDP losses, that it will record a real growth rate of more than 2%, corresponding to a three-year average rate more than double the average estimated rate for the Eurozone in same period (according to the latest available economic forecasts of the European Commission, Autumn 2024).

In 2025, investments are expected to emerge as a driving force of growth, replacing private consumption, which had the primary contribution in previous years, as a result of the pro-investment economic policy, the more intensive use of European resources, of those acquired from national structural policies for the business environment and the favorable financing conditions, following the relaxation of the ECB’s monetary policy and the strengthening of the climate of confidence from the recovery of the investment grade for the country. The rate of investment growth is forecast to reach 8.4% in 2025, stronger than in 2024 (6.7%).

Greece’s investment gap with eurozone countries, which peaked in 2019 after widening during the period of economic adjustment, will continue to narrow in 2025, for the sixth consecutive year. In fact, according to the revised national accounts data for 2023 published by ELSTAT in October 2024, the closing of the investment gap is taking place at an even greater speed compared to the relevant data of the draft state budget 2025, due to the more dynamic growth of real investments after 2019, mainly in the years 2022 and 2023. As a result, the target of the draft of the state budget to reduce the real investment gap in 2025 has already been achieved in 2023, at 5.4 percentage points according to the revised data of ELSTAT. In 2025, real investment in Greece is projected to recover further, to 17.5% of GDP compared to 20.8% of GDP in the Eurozone. This corresponds to a cumulative improvement of more than two-thirds (69.4%) of Greece’s investment gap in 2025 compared to 2019, with the investment gap for the year standing at 3.3 percentage points, the lowest since 2010 until today.

The percentage of annual real growth in 2025 not explained by investment dynamics is estimated to come on a net basis from private consumption growth (+1.6% y/y), sustained by positive trends in employment (+0.7%), in nominal private and public sector wage incomes (+3.4%) and in real household incomes, under the decreasing effect of inflation.

The strengthening of incomes (nominal and real) characterizes the government interventions, which were announced at the International Exhibition of Thessaloniki this year, concern 2025 and extend until 2027, with the main aim of improving the level of well-being for all social groups. The aim, among others, is to increase the average income in the private and public sectors, to strengthen pensions, to deal with the housing and demographic problem, to support vulnerable groups, to limit inequalities, to upgrade public health services and education as well as the promotion of entrepreneurship.

In 2025, harmonized inflation is estimated to be significantly closer to the ECB’s medium-term target (+2.1%), as underlying food and energy price pressures moderate further and core inflation smooths over the previous period, close to at the level predicted for the general index (+2.2%).

In Labor Force Survey terms, unemployment is projected to fall in 2025, for the first time since 2009, to a single-digit rate of 9.7% of the workforce and even lower in national accounting terms, to 8.2% of the workforce, benefiting from robust domestic economic activity, interventions in wages and insurance contributions and from synergies of the national and co-financed arm of APDE and the National Recovery and Resilience Plan “Greece 2.0” for employment.

In line with the European Commission’s spring forecast, the national forecast for a 2025 increase in dependent labor wages of 3.4% and wages per worker by 2.7%, at a rate higher than inflation (2.1%), suggests gains for the real average wage for the third year in a row, which is also linked to the further increase of the minimum and average wages (with a government target of 950 euros and 1,500 euros, respectively, in 2027). It is noted that if the reduction in insurance contributions is taken into account, the increase in net incomes is even greater, while in its autumn forecasts the European Commission revises upwards its forecast for the annual nominal increase in 2025, to 3.2% from 2 .7%, for dependent labor fees per employee. Labor productivity is expected to grow more strongly in 2025 (+1.5% year-on-year from +1% in 2024), benefiting from the transformation of the economy under the Recovery and Resilience Plan and from government reforms, preserving the competitiveness of the Greek economy.