GDP growth is projected to remain robust at 1.9% in 2026 and 2.0% in 2027. Disbursements of Recovery and Resilience Funds will support investment, and employment gains, personal income tax cuts and energy support measures will support consumption, despite high energy prices. Exports are projected to pick-up in the second half of 2026 with improving international demand. Headline inflation will rise to 4.2% in 2026 pushed up by higher energy prices before easing to 2.6% in 2027. Risks to growth are balanced, provided energy output and exports in the Middle East recover from the third quarter of onwards, as assumed. A better-than-expected expansion in tourism could boost growth while delays in the implementation of EU funds or prolonged disruptions to energy markets could dampen the outlook.

Sizeable primary fiscal surpluses are projected in 2026-27. Prudent fiscal policy and rapid debt reduction should remain a priority as challenges stemming from population ageing and investment needs will remain high. Limiting tax expenditures and continuing efforts to reduce tax evasion would create additional fiscal room to strengthen spending on education and health care. Recently-taken support measures against rising energy prices should be phased out rapidly as price pressure ease. Further simplifying permitting and licensing procedures for investments in renewable energy would help reduce reliance on fossil fuels.

Greece’s economy held up well during recent crises and outpaced the euro area over recent years. Gaps in GDP per capita to the most advanced OECD economies started to narrow as capital deepening, job creation, and structural reforms supported a steady recovery from the prolonged crisis. Progress has, however, been limited by weak productivity gains as the investment gap, albeit narrowing, remains large and many, mostly smaller firms still struggle to adopt digital technologies and innovate.

Achieving higher incomes, safeguarding competitiveness, and meeting high spending needs while maintaining public debt on a declining path will require bolstering productivity and sustaining employment gains. Better access to finance would empower more SMEs to innovate and invest in advanced technologies. Improving training and increasing labour force participation of women would ease skill shortages. Removing remaining regulatory burdens would strengthen competition and business dynamism.