Greece’s near-term economic outlook remains favorable, with real GDP sustaining its robust expansion, the head of the IMF Mission for Greece Joong Shik Kang said in a press conference on Thursday, following the conclusion of consultations under Article IV of the IMF’s Articles of Agreement for 2025.
According to staff Concluding Statement released on Thursday, Greece’s public finances have further improved, with the public debt-to-GDP ratio on a firm downward trajectory, amid continued fiscal consolidation supported by strong progress in reducing tax evasion. Continuing the reform momentum will establish a solid foundation to address remaining crisis legacies and structural challenges arising from the rising yet still low level of overall investment, an unfavorable demographic outlook, and sluggish productivity growth. The right policy mix aimed at continuing fiscal consolidation in a growth-friendly manner, implementing ambitious reforms to address supply-side structural impediments, and further strengthening financial system resilience is essential to achieve sustainable growth in the medium to long term, while ensuring fiscal sustainability and safeguarding financial stability.
The economy maintained its robust growth in 2024, supported by strong domestic demand, the statement said. Real GDP expanded by 2.3 percent year-on-year in the first three quarters, buoyed by a strong pickup in NGEU-funded investment projects and robust private consumption underpinned by rising real income. The unemployment rate fell to 9.5 percent in third quarter of 2024, a historic low since 2009, and the vacancy rate has risen, reflecting labour shortages in a few sectors, particularly construction, tourism-related services, and high-skill sectors. The labour force participation rate has also gradually risen but remains among the lowest in EU, especially for women.
Disinflation is underway at a gradual pace with headline and core inflation at 2.9 and 3.4 percent (y/y) in end-2024, respectively, amid persistent services inflation and wage growth.
Along with strong economic activity, credit growth to the private sector has accelerated to 9.4 percent (y/y) in 2024Q4, accompanied by a continued increase in residential real estate prices.
High domestic import demand, driven by investment, also contributed to the widening of the current account deficit to an estimated 6.9 percent of GDP in 2024.
