Greece’s economic outlook remains a complex blend of remarkable resilience and underlying structural imbalances, as highlighted by the European Commission’s Spring Forecast and Fitch Ratings’ latest assessment.
Both institutions agree on a common theme: Greece is growing stronger than most of Europe. At the same time, however, inflation is proving stubborn, household savings are negative, and the country continues to run the largest trade deficit in the bloc.
Fiscal Strength Leads the EU, Growth Surges Ahead
The European Commission projects Greece’s economy will grow by 2.3% in 2025, in line with government and Bank of Greece estimates, before easing slightly to 2.2% in 2026. These growth rates rank among the top ten in the EU, significantly above the eurozone average of 0.9% and the EU’s overall forecast of 1.1%. The main drivers of this performance are robust consumption, supported by rising real incomes, and a strong surge in investment backed by the EU Recovery and Resilience Fund. Investment is expected to grow by 7.8% in 2025, the second-highest rate in the EU, and by 7.3% in 2026.
Greece’s fiscal discipline is equally noteworthy. The primary surplus is projected to reach 3.8% of GDP in 2025, exceeding the government’s own target of 3.2% and positioning Greece second only to Cyprus in the EU. For 2026, the surplus is forecast at 4.4%, continuing the strong momentum from 2024’s record 4.8%. Meanwhile, the general government surplus is projected at 0.7%, also the second-best result in the EU.
Credit is attributed to structural reforms, such as enhanced tax collection, digital work card implementation, and increases in municipal and tourism-related taxes. Public debt is projected to fall to 146.6% of GDP in 2025 and 140.6% in 2026, closing in on Italy’s level and marking a dramatic improvement from the pandemic peak of 209%.
Risks Remain: Inflation, Trade Gap, and Political Pressures
Fitch Ratings, which affirmed Greece’s credit rating at “BBB-” with a positive outlook, echoed the Commission’s optimism. Citing strong fiscal results, Fitch noted that Greece recorded a budget surplus of 1.3% of GDP in 2024, a significant reversal from a 1.4% deficit in 2023.
Nevertheless, the outlook isn’t without caveats. Inflation remains high, averaging 2.8% in 2025, driven in part by wage growth. Greece also posts the largest current account deficit in the EU, at 8.2% of GDP, compared to the EU average surplus of 2.5%. Moreover, it is the only EU country with negative household savings, at -2.5% in 2025.
While Fitch forecasts continued growth and budget surpluses, it also notes potential political and fiscal risks. Defense spending remains elevated at nearly 3% of GDP, further constraining budget flexibility. Despite its €36 billion in cash reserves, Greece remains vulnerable to broader economic shocks within the European Union.