The Greek economy is strong and is forecast to grow at a rate of 2.3% this year, 2.2% in 2025 and 2.5% in 2026, according to the OECD’s six-monthly report on the world economy (Economic Outlook).

“Increasing disposable income will boost consumption as a tight labor market and minimum wage increases support wages,” the report said.

It notes that real household disposable income per person is currently higher than the pre-pandemic level and also higher than expected based on the pre-pandemic trend.

The fact that Greece is, along with Portugal and Spain, among the few OECD countries for which revisions to potential per capita growth are positive “also shows that structural reforms are paying off over time, as these countries are among those that have made the most reforms in the past two decades,” the report notes.

The OECD predicts employment growth will gradually slow amid rising labor costs – nominal wages it says rose 8.6% in the second quarter of 2024 year-on-year as labor shortages remain at historically high levels.

Inflation is expected to ease to 2% towards the end of 2026 due to a persistent rise in service prices.

Resource disbursements from the Recovery and Resilience Fund (RESF) will support investment growth, with the OECD noting that from 1.8% of GDP this year they will reach 3.6% in 2026. “Any delays in the absorption of resources of the TAA, an excessive wage increase or new extreme weather events could limit the outlook.”

Regarding public debt, the OECD estimates that primary surpluses of 2.4% of GDP in 2025 and 2026 will contribute to its further reduction to 148.1% of GDP in 2026. At the same time, it notes, the announced reduction of insurance contributions (corresponding to 0.2% of GDP) and the increase in pensions (corresponding also to 0.2% of GDP) will support incomes in 2025.

“Maintaining a steady downward trend in public debt must remain a priority, as the costs of population aging and investment needs will add to future spending pressures,” the OECD says.

“Limiting tax expenditures, particularly on fossil fuels, and continued efforts to combat tax evasion would also raise revenue and allow for a reduction in the tax burden on labor for low-wage earners, encouraging further employment growth,” the report notes. .

The global economy is resilient

For the global economy, the OECD says it has shown remarkable resilience to the major shocks of the pandemic and energy crisis, with growth holding steady this year at 3.2%, while inflation has continued to ease.

“Despite some easing in labor markets, unemployment rates remain close to historically low levels in many countries. Global trade is also recovering,” the report said.

The OECD projects this resilience to continue with global GDP growing by 3.3% in both 2025 and 2026 and inflation falling towards central bank targets.

“However, this overall strong performance masks significant differences between regions and countries and is surrounded by significant downside risks and uncertainties. In particular, there are increasing risks related to rising trade tensions and protectionism, with a possible escalation of geopolitical conflicts and problematic fiscal policies in some countries.”

For the Eurozone, GDP growth is forecast by 1.3% in 2025 and 1.5% in 2026 from 0.8% this year. Higher GDP growth is expected in the US – to 2.4% in 2025 and 2.1% in 2026 from 2.8% this year.