The Greek economy remains resilient and is expected to grow at a rate of 2% in 2024 and 2.5% in 2025 as rising employment and real wages and strong tourism boost consumption, according to the OECD’s six-monthly report (Economic Outlook).

Despite the slowdown in new job growth, the employment rate and labour force shortages remain at historically high levels, it was pointed out.

Wage growth reached 5.5% in the fourth quarter of 2023 on an annual basis, the OECD noted, with the minimum wage increasing by 9.4% in April 2023 and a further 6.4% in April 2024.

The absorption of Recovery and Resilience Fund resources and continued improvement in bank soundness will support investment, despite tight financial conditions, the report added, with investment forecast to grow 9% in 2025.

Inflation will continue to decline, but at a slower pace and is forecast to ease to 2.1% in the last quarter of 2025.

The forecast for a primary surplus of 1.8% of GDP this year and 2.1% in 2025 seems right, given the high public debt the report says, which is estimated to decline to 151% of GDP in 2025 from 161% in 2023. The growth of the economy and further progress in the fight against tax evasion will boost public revenues.

The OECD emphasised that the main challenges facing the Greek economy are the strengthening of productivity and fiscal adjustment due to high debt. It noted that in order to continue reducing the debt, alongside the high spending that is necessary due to the low investment in the decade of the crisis, the ageing of the population and the response to climate change, sustained and strong economic growth will be needed.

Productivity growth, which is a third lower than the OECD average, would simultaneously create more fiscal space and raise living standards.