The Greek economy is projected to see steady growth in the coming years, with projected rates of 2% in 2024 and 2.5% in 2025. This growth will be fueled by a variety of factors, including rising employment, strong wages, and a thriving tourism industry.
Although new job creation has slowed down somewhat, the employment rate and labor force shortages are at historically high levels. Wage growth has been a major factor in this, with an increase of 5.5% seen in the final quarter of 2023. This includes an impressive rise of 9.4% for the minimum wage in April 2023 and an additional increase of 6.4% in April 2024.
In addition to wage growth, other factors are also expected to support investment and boost economic growth despite tight financial conditions. These include improvements in bank soundness as well as the absorption of funds from the Recovery and Resilience Fund. The report predicts that by 2025, these factors will lead to a forecasted growth rate of 9%.
Despite these positive signs, there are still challenges ahead for the Greek economy. Inflation is expected to decline at a slower pace but it will reach its peak at around 161% GDP by year-end, which is slightly higher than expected earlier due to supply chain disruptions caused by energy crisis and high demand for imported goods due to tourism seasonality . The OECD recommends addressing high debt through fiscal adjustment as well as boosting productivity as main challenges for Greece’s future economic success.
Overall, sustained and robust economic growth will be crucial for reducing debt levels, addressing population aging challenges and responding effectively to climate change
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