## Greece’s Remarkable Recovery

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**Canonical URL:** [Greece’s Remarkable Recovery](https://www.imf.org/en/publications/fandd/issues/2025/06/greeces-remarkable-recovery-konstantinos-hatzidakis)

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## Bibliographic details
- Authors: KONSTANTINOS HATZIDAKIS
- Published: June 2, 2025

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### Overview and headline findings
- Greece has transitioned from being "Europe’s economic Achilles’ heel" to "an unlikely success story" with growth rates outpacing the European Union average.
- Public debt has decreased almost 55 percentage points of GDP, described as "one of the steepest declines Europe has ever seen."
- Unemployment has declined "to levels unseen in over a decade."
- Investment has rebounded significantly and exports are described as historically high.
- Fiscal policy is characterized as consistent, delivering increasing primary surpluses.

### Fiscal and macroeconomic outcomes
- Primary surplus reached 4.8 percent of GDP in 2024.
- Overall budget surplus was 1.3 percent in 2024.
- Tackling tax evasion is estimated to have increased revenues by "almost 3 percent" in the previous year.
- Government projects maintaining primary surpluses "close to 2.5 percent of GDP" over the next few years.
- Debt-to-GDP ratio is projected to decline by an additional "20 percentage points by 2028."
- Strategy includes potential strategic use of substantial cash buffers for early debt repayments.

### Banking sector and financial confidence
- Nonperforming loans were curbed and balance sheets cleaned up, enabling banks to "fully regain their essential role in financing the real economy."
- Deposits have increased steadily and strong profitability has strengthened capital adequacy ratios.
- The Hellenic Financial Stability Fund sold its holdings in local banks, attracting long-term foreign investors.
- Policy commitments include strengthening competition in the banking system and expanding financing options beyond traditional bank lending (venture capital, private equity, capital market development).

### Structural reforms and competitiveness
- Taxes and social security contributions were reduced.
- Licensing procedures were simplified; labor legislation was modernized.
- Research and innovation incentives include amortizations of up to "315 percent for R&D expenses."
- Privatizations have proceeded "at record pace," generating public revenue and investment opportunities.
- A new insolvency framework is classified by the OECD as meeting "best international practice," contributing to a decline in private debt in absolute terms and relative to GDP.
- Reforms enacted across digitalization, justice, education, upskilling and reskilling, the pension system, and transparency standards.
- Restructuring of the GrowthFund aims at more efficient public asset management.
- Plans to remove remaining market entry barriers, particularly in the services sector, to foster competition and business dynamism.

### Challenges and remaining vulnerabilities
- Debt-to-GDP ratio "remains high," though described as having a favorable structure and interest rate provisions.
- Inflation is "declining" but "remains sticky, particularly in the services sector."
- Investment is improving but "still lags the EU average," requiring further capital mobilization.
- Productivity is rising but "remains below the EU average."
- Labor market participation "particularly among women" remains low relative to peers.
- Need to strengthen resilience to external challenges including the green and digital transitions and global economic fragmentation.

### Future agenda and policy priorities
- Maintain fiscal prudence and primary surpluses close to "2.5 percent of GDP."
- Strengthen tax compliance; use higher public revenues to implement growth-friendly tax reductions for labor and businesses to boost disposable incomes and competitiveness.
- Continue transformational reforms: simplify business regulation, improve state administrative capacity, and remove market entry barriers in services.
- Enhance legal certainty for investors by speeding up the delivery of justice through comprehensive legal reforms and expanded use of advanced technologies.
- Fully implement the National Cadastre and complete local and regional urban plans to delineate land uses transparently.
- Expand financing alternatives beyond banks: strengthen capital markets, foster venture capital and private equity activity.
- Optimize use of EU funds to unlock investment.
- Invest in renewable energy and electricity grids to reduce energy costs.
- Prioritize upskilling initiatives to equip the workforce for evolving economic demands.

### Outlook and conclusions
- The author expects growth to "continue outperforming the European average for the foreseeable future."
- Greece benefits from access to the European single market, "low economic and institutional uncertainty," strong political stability, and clear geopolitical orientation.
- The combination of these attributes and an ambitious reform agenda is presented as making Greece increasingly attractive for investment and supportive of higher living standards and welfare.

*Konstantinos Hatzidakis, June 2025 — "Greece’s Remarkable Recovery."*

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## Content in this bundle

- **Remarkable Recovery**
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_Source: https://www.imf.org/en/publications/fandd/issues/2025/06/greeces-remarkable-recovery-konstantinos-hatzidakis_