Greece's economic outlook remains promising as GDP growth rates are projected to hover around 2.3% to 2.5% over the next few years, according to the latest monetary report published by the Bank of Greece (BoG). The growth rate is expected to reach 2.3% in 2024, accelerating to 2.5% by 2025, before slightly declining to 2.3% and 2.0% respectively for the years 2026 and 2027.
Key components fueling this growth include domestic consumption, alongside positive contributions from investments and exports. While the external sector's contribution to GDP is anticipated to remain slightly negative, as heightened investment activity and bolstered consumption are projected to increase imports at rates comparable to exports.
Inflation also plays a pivotal role, with expectations for it to dip to 3.0% in 2024, down from 4.2% the previous year, chiefly due to a marked decrease in food inflation. The long-term forecast indicates inflation will converge toward the European Central Bank’s (ECB) target of 2% by 2026, with core inflation predicted to decline significantly to 3.5% and 3.1% respectively in 2024 and 2025. Services inflation, conversely, is expected to persist due to increasing labor costs.
Nevertheless, risks and uncertainties potentially cloud these optimistic macroeconomic growth projections. Key concerns include geopolitical tensions related to Ukraine and the Middle East, challenges arising from international trade protectionism, and possible delays related to the absorption of Recovery and Resilience Facility (RRF) funds. Additional factors like labor market difficulties, wage pressures, and natural disasters linked to climate change could also disrupt growth.
Despite these challenges, the BoG lauds Greece's resilience amid external shocks, such as the COVID-19 pandemic and the energy crisis exacerbated by the war in Ukraine. The Greek economy has outperformed the EU average since 2019, enhancing real GDP per capita convergence toward the European average, alongside decreasing unemployment rates and rising disposable income levels.
Remarkable success has emerged from Greece's prudent fiscal strategies and anti-tax evasion measures, yielding substantial primary surpluses without necessitating restrictive economic measures. Public debt as a percentage of GDP is also on the decline, demonstrating improved creditworthiness for the Greek state.
One of the notable signs of economic progress is the recent upgrade of Greek government bonds' creditworthiness from BBB- to BBB by the rating agency Scope Ratings, highlighting increased confidence among investors.
BETA AΧΕΠΕΥ's recent report titled “Greece 2025: Pick-and-Roll” contributes to this narrative by identifying key investment opportunities such as Piraeus Bank, Alpha Bank, and OPAP among others, set to thrive as the country's GDP continues its upward momentum. Their analysis emphasizes higher growth rates compared to the Eurozone average, reinforcing the structural reforms and positive economic indicators.
The expected driving forces of Greece's economic activity going forward include continued investment expenditures—bolstered by EU recovery funds—and private consumption, stimulated by climbing real disposable income stemming from rising employment and lowered inflation.
According to BETA, Greek companies have steadily exceeded expectations across various economic benchmarks, positioning them to capitalize on economic growth and deliver returns for the fifth consecutive year. Within this favorable climate, significant infrastructural projects and residential investments are anticipated to accelerate, alongside expected upgrades to investment-grade status from major credit rating agencies.
BETA's report notes the possibility of central banks adopting more aggressive monetary easing measures, including additional interest rate cuts, which may bolster investments and improve financial conditions for listed companies.
While geopolitical risks remain, they have largely been factored in by the markets; signs of de-escalation could markedly improve Greece's investment environment and facilitate smoother capital flows. The anticipated impact of potential upcoming elections in France and Germany is another variable influencing broader EU market dynamics.
With the Athens Stock Exchange moving closer to inclusion within the world's top capital markets, BETA predicts this will lead to improved financing conditions for public companies and stimulate new job creation, estimating gradual capital influxes of around €2 billion following the announcement of new regulations.
Companies showcasing stable growth trajectories, particularly those with international revenue strategies, are positioned well for the future. Energy firms like DEI, along with other notable enterprises, are expected to thrive within these favorable conditions.
Overall, the Greek economic outlook presents numerous opportunities for growth and development, signaling potential for remarkable returns for both local and international investors as the country continues its recovery path.
