Robust growth prospects for Greek economy supported by investment, fiscal policy

Greece’s economy is set for another year of strong growth – well above the Eurozone average – with investment and private consumption driving economic activity and supported by a prudent fiscal policy.

According to the latest annual report by the Bank of Greece, the Greek economy is set to grow 2.3% in 2025 – the same rate as in 2024 – and broadly in-line with the most recent outlook of the International Monetary Fund, which also sees the country continuing with a robust expansion.

“The Greek economy continues to demonstrate strong resilience and record positive performance,” BoG Governor Yannis Stournaras said in a speech at the Annual General Meeting of Shareholders

earlier this month. “Particularly noteworthy is investment, which has shown a strong momentum in recent years.”

Over the past five years, investment spending in Greece has grown steadily, contributing an average of 1.6 percentage points to annual GDP growth, significantly higher than the Eurozone average of 0.3 percentage points. More importantly, the composition of investment in Greece has shifted, heralding a change in the Greek economy and its long-term growth prospects.

Prior to the world financial crisis, nearly half of private investment in Greece was channeled into residential construction and too little into productive investment. Currently, however, about 80% of private investment is directed towards productive capital and only 20% towards housing. And, reflecting the growing confidence in Greece’s economic outlook, foreign direct investment has been increasing and rose to €6 billion – or 2.5% of GDP – last year, the second highest level in the past 20 years.

In the most recent IMF staff report on Greece, also released this month, the Fund confirms that the country’s near-term economic outlook remains strong, with GDP continuing to grow steadily, driven by public investment, European Union-backed reforms, and private consumption, while public debt is firmly on a downward path.

“Greece’s near-term economic outlook remains favorable, establishing a solid foundation to address remaining crisis legacies and structural imbalances necessary for achieving sustainable growth in the medium to long term,” the report said. “Real GDP has continued its robust expansion, driven by public investment and structural reforms in the context of the Next Generation EU, alongside steady growth of private consumption. The public debt-to-GDP ratio, while still high, is on a firm downward trajectory.”