Greece’s economy continues to outperform European averages. In Q1 2025, real GDP grew by 2.2% year-on-year, surpassing the Eurozone average of 1.5% and the EU-27 average of 1.6%. Since Q3 2021, Greece’s economic activity has consistently exceeded European norms, primarily driven by robust private consumption despite persistent inflationary pressures. Employment gains underpin this consumption, with the unemployment rate falling to 7.9% in May—levels last seen in 2008. Private consumption accounted for over 70% of GDP in Q1, the highest among EU member states. However, to sustain long-term growth, it is vital to boost investment contributions as outlined in the National Recovery and Resilience Plan, which will enhance job creation and productivity.
Positive Demand Indicators
Retail sales volumes grew steadily through April, posting a 7.5% year-on-year rise. Business confidence in retail also improved significantly, with the index climbing from 93.8 in January to 105.9 in June. Passenger car registrations rebounded after an early-year dip, rising 1.9% cumulatively in H1. Consumer spending is further supported by solid consumer credit growth, averaging 5.6% in the first five months. Nonetheless, consumer sentiment remains deeply negative and worsened in June, highlighting persistent cautiousness among households.
Investment Momentum
Investment indicators show strong momentum, with capital goods production rising sharply in the first five months. Correspondingly, lending to non-financial corporations increased notably, signaling growing business investment. The construction sector’s business expectations reached their highest level in 25 years in June. However, private construction activity declined sharply in Q1, partly due to base effects following strong growth in the previous two years (2023: +25%, 2024: +27%).
Leading economic indicators also point to sustained expansion. The Economic Sentiment Indicator (ESI) stood at 106.1 in June, well above the EU and Eurozone averages of 94. The Purchasing Managers’ Index (PMI) remained strong at 53.1, ranking second highest in the Eurozone and signaling ongoing manufacturing growth for over two and a half years.
Robust Fiscal Performance
Greece’s fiscal outlook remains strong. The primary surplus of the General Government reached €5.4 billion in the first five months of 2025, more than double the €2.1 billion recorded in the same period last year. The overall budget balance, including interest payments, posted a surplus of €2.1 billion, compared to a €1.6 billion deficit in early 2024. Revenue growth, driven by rising employment and disposable incomes as well as anti-tax evasion reforms, outpaced expenditure increases.
Investment Grade Credit Rating Restored
All major credit rating agencies now classify Greece’s sovereign debt as investment grade. Moody’s completed the upgrade in March 2025, reflecting Greece’s economic resilience, improved fiscal fundamentals, and stable political and financial institutions. This confidence has fueled a 27% surge in the Athens Stock Exchange General Index in H1, reaching its highest level in 15 years. Meanwhile, the 10-year Greek government bond yield declined to early-year levels, remaining below Italy’s and slightly above France’s benchmark yields.
