Greece is currently demonstrating an exciting mix of economic stability and strict budgetary discipline.
This balance reduces financing costs and makes Greek assets more attractive.
As long as growth, primary surpluses and debt quality remain on track, there is room for improvement in creditworthiness.
The ratings of recognised rating agencies reflect this development.
Low risk premiums on government bonds and the small interest rate differential to German bonds show that investors have more confidence.
This creates really good conditions for investment in Greece in the medium term.
Development driven by domestic forces, sustainable prospects
The Greek economy is growing mainly due to strong domestic demand and increased investment.
External, short-term effects play hardly any role in this.
In 2024, growth was 2.3%, well above the eurozone average of 0.9%.
Similar figures are expected for the years 2025 to 2028.
The momentum is coming mainly from three directions:
- Private consumption
- Higher employment
- Accelerated investment
Part of this investment will flow through the Recovery and Resilience Programme (RRP).
Greece can mobilise around €36.6 billion here, which represents around 16% of GDP.
Key figure |
Value 2024 |
Value 2023 |
|---|---|---|
Economic growth |
2.3% |
– |
Unemployment rate |
7.9% |
9.8% |
RRP funds (total) |
€36.6 billion |
– |
The unemployment rate fell from 9.8% to 7.9% in just twelve months.
This strengthens the country’s investment capacity.
The banking system is now also more stable, creating more scope for investment.
Important factors for sustainable growth:
- Stable and rising domestic purchasing power
- Effective use of EU funds (RRP)
- Improvement in the employment situation
- Strengthening of the financial system
Fiscal reliability, declining debt ratio. Some statistics
Greece’s public finances currently look fairly solid.
In 2024, the overall surplus was 1.3% of GDP.
The primary surplus even reached 4.8% of GDP.
Government revenue was 9.5% above budget – a sign of better tax compliance and less undeclared work.
Year |
Overall result (% of GDP) |
Primary surplus (% of GDP) |
Debt ratio (% of GDP) |
|---|---|---|---|
2020 |
– |
– |
210 |
2024 |
1.3 |
4.8 |
153.6 |
2026* |
0.7 |
– |
141 |
2030** |
– |
– |
125 |
* European Commission forecast
** International Monetary Fund (IMF) forecast
Despite higher social spending and rising defence costs, fiscal developments remain stable.
The European Commission expects a surplus of 0.7% of GDP in 2025 and 1.4% in 2026.
The debt ratio is clearly falling.
From almost 210% of GDP in 2020 to 153.6% in 2024 – still high, but the trend is right.
It is expected to fall to 141% by 2026 and 125% by 2030.
Important points regarding the debt profile:
- 100% of the debt has a fixed interest rate (after swaps)
- Average maturity: approximately 18.7 years
- Around 74% of the debt is held by official creditors
- Cash reserves: approx. €40 billion (approx. 16% of GDP)
These reserves cover financing for three years.
This means that the risk posed by market fluctuations remains low.
Investors are responding with confidence.
- Stable surpluses despite challenges
- High and falling debt ratio
- Long-term, fixed-interest debt structure
- Large liquidity reserves as collateral
- Positive effects on investment climate and confidence
External imbalances, inflation and external risks
The external sector remains one of the biggest weaknesses.
In 2024, the current account deficit stood at 6.9% of GDP.
The net international investment position: minus 130.4%.
This means that Greece owes more to foreign countries than it owns itself.
Financial background
Year |
Current account deficit (% of GDP) |
Net international investment position (%) |
|---|---|---|
2024 |
-6.9 |
-130.4 |
Forecast (2 years) |
-8.1 |
– |
Forecast 2029 |
-4.1 |
– |
The deficit is mainly due to insufficient savings and high import dependency for investments.
The economy is much more open today, and exports have doubled since 2010.
Foreign direct investment and EU funds help to mitigate the risks.
Inflation trend
Inflation is likely to remain above the target of 2%.
This is due to the open economy and external influences.
Foreign policy tensions, trade protection and extreme weather are weighing on the economy.
However, the direct impact of US policy is low.
External risks
- Trade protection measures: Make export and import goods more expensive.
- Geopolitical tensions: Can affect trade and investment.
- Climatic events: Disrupt supply chains and production.
- Dependence on foreign countries: The high propensity to import remains a weak point.
Positive trends
- Export capacity is increasing due to greater competitiveness and lower labour costs.
- Renewable energies are becoming more important and reducing dependence on energy imports.
- EU aid and foreign investment are strengthening financial stability.
Summary of risks and opportunities
Factor |
Impact on the economy |
|---|---|
Current account deficit |
Impacts financing capacity |
Low savings |
Increases dependence on foreign capital |
Rising exports |
Improves balance of payments and competitiveness |
Inflation > 2% |
Negatively impacts purchasing power and consumption |
Geopolitical tensions |
Increases uncertainty and risk |
Greater use of renewables |
Reduces energy imports and strengthens domestic production |
The Greek economy continues to struggle with challenges. At the same time, growing exports and greater openness are opening up new prospects.
However, external risks remain an issue that should not be underestimated.
Banks and regulatory framework: From restructuring to supporting growth
Greece’s banks have made considerable progress in recent years. In particular, they have been able to significantly reduce non-performing loans.
Programmes such as ‘Hercules’ have helped to reduce the ratio of non-performing loans at major banks from 32% in 2020 to just 2.9%. That is quite a leap.
The capital situation is also looking better. The average CET1 ratio is now 16% – which is even above the European average.
Stress tests conducted by the European Banking Authority (EBA) show that Greek banks are expected to suffer fewer capital losses than many of their EU counterparts.
Capital structure plays an important role here. Fewer deferred tax assets mean that banks can strengthen their capital base more quickly and securely.
This brings stability and creates more confidence among investors and customers. Sounds solid at first glance.
The regulatory framework has also improved noticeably. Several rounds of reforms have strengthened the governance of financial institutions.
Thanks to EU and eurozone membership, there is now greater political and economic reliability. This is a real plus for investors.
A broad political consensus on sustainable fiscal policy also contributes to stability. This helps to keep public debt at a sustainable level and attracts long-term investment.
Factors for progress in the banking sector |
Key figures and developments |
|---|---|
Reduction in non-performing loans |
From 32% (2020) to 2.9% |
Capital adequacy (CET1) |
Average of 16% |
Results of EBA stress tests |
Lower capital losses than EU average |
Improved capital structure |
Faster reduction of deferred tax assets |
Reforms in the regulatory framework |
Better governance and supervision |
Political stability and EU membership |
Increased political and economic credibility |
Sustainable fiscal policy |
Support for debt burden and investment history |
The banking system is now much more stable. Banks are once again able to lend more to businesses and households.
This is creating momentum for economic development. It is also creating opportunities for sustainable growth.
Stricter rules, better capitalisation and a more stable political environment are helping banks to function better as a source of financing again. This will likely form an important basis for renewed confidence and further investment in the coming years.
- Successful restructuring: Sharp decline in non-performing loans.
- Strong capital base: Above-average CET1 ratio.
- Secure structure: Improvement due to faster decline in deferred tax assets.
- Stable framework conditions: Improved governance and EU integration.
- Political support: Uniform, sustainable fiscal policy.
- Growth promotion: Better lending thanks to lower risks.
What do all these developments mean for investment strategy?
Greece’s risk premium remains on a downward trend, provided the country maintains its primary surpluses and continues to invest in its own production base.
These factors in particular strengthen investor confidence and consolidate the economic foundation. Without them, it will probably not work.
- Maintain primary surpluses: Stable budget management remains crucial to reducing debt.
- Promote investment: Increased production capacity ensures sustainable growth in the long term.
- Continue reforms: Structural adjustments strengthen competitiveness and increase market confidence.
International agencies now assess the risks as fairly balanced. In the short term, the greatest dangers appear to be under control.
There are signs of better credit ratings, especially if sustainable budget surpluses and reforms continue to reduce the debt ratio.
Risks to keep an eye on:
- Weakening of budgetary discipline: If budget targets are no longer met, market confidence could suffer.
- Failure to meet obligations: If reforms or investments are not implemented, there could be negative consequences.
- External economic factors: Changes in foreign trade or new trade barriers could slow down development.
- Persistently high inflation in the service and energy sectors: This puts pressure on purchasing power and increases costs.
Investors are focusing specifically on assets that benefit from declining country risk. However, it is important to keep an eye on external imbalances and inflation trends.
A disciplined approach helps to exploit opportunities and limit risks. This is rarely possible without some anxiety.
Factor |
Significance for investment strategy |
|---|---|
Primary surplus |
Strengthening financial stability |
Investments |
Expansion of the production base and long-term growth |
Reforms |
Improvement in competitiveness and risk reduction |
External risks |
Require increased attention and flexible adjustment options |
Inflation |
Impact on cost structure and consumer behaviour |
Anyone investing in Greece today will find themselves in a better position than they would have been a few years ago. Nevertheless, the strategy should remain flexible enough to respond to market distortions or external weaknesses.
Ultimately, the investment strategy is about benefiting from the gradual improvement in economic fundamentals. Discipline and control remain the be-all and end-all.
What does the future hold for the Greek economy when EU funds dry up?
The Greek economy is currently growing. Nevertheless, many are wondering how the country will manage without EU aid.
Financial support from the Recovery and Resilience Facility (RRF) programme will expire in 2026. After that, many estimate that growth could slump to around 1% per year.
Key challenges for Greece:
- Maintaining investment: Without EU funds, Greece must find new ways to invest in businesses and technology.
- Demographic change: The population is ageing. Fewer workers and less dynamism are slowing down growth.
- Labour market problems: Lack of flexibility and imbalances are making the situation more difficult.
The European Commission believes that Greece will probably still grow at just over 2% between 2025 and 2027. After that, the outlook is likely to be less rosy.
The OECD cites the RRF as the main driver of current growth. But even it doubts that Greece can maintain this pace without help.
Focus on new economic models
Analysts say Greece must adapt its economic model to remain stable in the long term.
This includes:
- Strengthening technology and innovation
- Boosting export growth
- Creating more savings
- Producing products with higher added value
The goal: to move away from the ‘coffee house economy’ towards greater productivity and genuine sustainability. It sounds easier than it is – but something has to happen.
Investment development and EU funds
The RRF has given investment in Greece a significant boost. This year, it is expected to grow by 7.5%. By 2026, it could even reach 10%.
These figures are heavily dependent on EU funding. After 2026, the effects will still be noticeable, but without new sources of funding, there is a risk of a sharp decline.
Factors of EU funding |
Description |
|---|---|
Next Generation EU (NGEU) |
Programme to strengthen the economy over 6 years |
Focus |
Digitalisation and green technologies |
Impact |
1–1.5% growth boost for Southern Europe |
What remains to be done?
Greece is at a turning point. The country must finally make the transition to a new economic model based on innovation and productivity.
Otherwise, Greece will hardly be able to grow independently after EU funding ends. The next few years will be crucial in setting the right course.
Without this change, Greece is in danger of stalling economically once again. Despite all the progress made in recent years, there is still much to be done.
