OECD Projects Greek GDP to Reach 2% in 2025

Greece’s GDP growth is projected to reach 2% in 2025 and 2.1% in 2026, according to the latest Economic Outlook report on global economic prospects released by the OECD.

According to estimates, investments will be bolstered by disbursements from the EU’s Recovery and Resilience Facility, while increases in the minimum wage are expected to support consumption, even as exports slow in line with weaker external demand.

Inflation is set to ease to 2% by 2026, aided by lower oil prices, a development partially offset by persistent elevated trade costs and nagging inflation in services.

The report also warns that delays in absorbing EU funds, excessive wage increases, or new extreme weather events could negatively affect economic prospects.

The report also warns that delays in absorbing EU funds, excessive wage increases, or new extreme weather events could negatively affect economic prospects.

Climate change, manifesting through extreme weather events, is one of the key risks to Greece’s economy, the report warns.

While the organization remains optimistic about Greece’s overall economic outlook—highlighting growth and improvements in core macroeconomic indicators such as the debt-to-GDP ratio—it specifically flags the potential reoccurrence of extreme weather as a threat to those positive projections. In the section of the report focused on Greece, it notes that such events could undermine economic momentum.

“Extreme weather phenomena, such as the 2023 floods in Thessaly, could also negatively affect domestic demand,” the report states.

The OECD also projects significant primary fiscal surpluses for Greece in 2025 and 2026, estimated at 2.1% and 2.2% of GDP respectively, supported by what it describes as improved tax compliance.

Maintaining public debt on a steadily declining path should remain a priority, the report emphasizes, as the fiscal pressures of an aging population and growing investment needs are expected to increase in the coming years.

The report states the high level of public debt poses medium-term risks, while population aging and climate change are adding to future pressures on domestic spending.

Source: tovima.com