OECD: Greece’s Growth to Hit 2.2% in 2025, Inflation to Decline

Greek GDP is projected to grow in the following years according to the OECD’s semi-annual Economic Outlook report on the global economy.

More specifically, the organization sees 2.3% growth in 2024, a 2.2% in 2025 and forecasts a 2.5 percentage for 2026. OECD reports that annual inflation remained persistent in Oct. of 2024 at 3.1%, while core inflation stood at 4.3%, driven by rising service costs.

Data reveal that business lending has increased and the decline in mortgage loans has slowed down amidst improvements, although it remains limited. Non-financial businesses gained easier access to loans from Jan. to Sept. 2024; with lending being 54% higher than the same period a year ago.

Interest rates for new loans to households and businesses decreased from 6.2% in Jan. 2024 to 5.4% in Sept.

As for fiscal policies, it is forecasted that they will remain supportive, with disbursements of grants and loans from the Recovery and Resilience Fund projected to increase from 1.8% of GDP in 2024 to 3.6% in 2026.

Regarding the country’s unemployment growth, the OECD report mentions that it is expected to slow down due to rising labor costs. Nominal wages grew by 8.6% in the second quarter of 2024 on an annual basis, as labor shortages remain at historically high levels.

On the other hand, inflation is expected to gradually decline, approaching 2% by 2026, despite persistent increases in service prices and core inflation, which is forecast to drop from 3.7% in 2024 to 3.3% in 2025 and 2.1% in 2026.

The organization estimates that a rimary surplus of around 2.4% of Greek GDP in 2025 and 2026 will contribute to further reducing the country’s public debt to 148.1% of GDP by 2026.

Additionally it predicted that the reduction in social security contributions and pension increases, which were announced by the Greek government, will further support incomes in 2025.

“Maintaining a steady downward trajectory of public debt should remain a priority, as aging-related costs and investment needs will add to future spending pressures,” the OECD states.