The State of the Greek economy (Q3 2025)
Everything you need to know about Greece's macro picture in 33 charts
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📊🇬🇷 The State of the Greek economy (Q3 2025)
Welcome to the quarterly update on the macro picture of Greece.
This is meant to be a comprehensive summary of the country’s economic reality, a combination of the latest and greatest.
Today, we have 33 juicy charts for your delightful consumption.
Let’s jump straight in!
1. The Greek economy keeps growing
Greece’s economy is expected to grow by about ~2% in 2025 and 2026.
In Q2 2025, Greece maintains the 8th fastest GDP growth rate quarter-on-quarter in the EU, well above average.
But the growth percentage is not as interesting as Greece’s GDP decomposition.
A few interesting observations:
Greece’s GDP is still below pre-crisis levels, but on a path to surpass it by ~2030, if it continues with an average growth rate around its current ~2%.
Consumption has been consistently the biggest component of Greek GDP and has been almost unchanged in 20 years. Greeks continue consuming like crazy, often even beyond their means (or, by virtue of making more than they actually declare).
The Greek state has actually become more efficient. Consumption of General Government is below pre-crisis levels and has only marginally increased over the past 10 years.
Investment flows are going up, but still below pre-crisis levels. Gross capital formation has yet to reach its former peak, but has been growing steadily.
Exports have increased. That’s really great.
Imports are ballooning. That’s pretty bad.
2. Unemployment is falling steadily
Unemployment in Greece has been falling continuously over the past few years, reaching 8.1% in 2025, down from almost 30% in the 2014-15 era.
This is one of the most consistently positive themes in Greece’s macro picture.
Some critics argue that the change is not real, often pointing to the difference between the Labour Force Survey from ELSTAT and the employment measure from National Accounts (NA), the latter being slightly higher. But that’s not true.
The data is clear and unambiguous:
Total employment has been increasing continuously across both the ELSTAT and the NA unemployment measure. In fact, total employment in Greece according to the NA reading is 5% above its pre-crisis peak, even after we account for demographics (i.e. decline in the working-age population).
The number of unemployed Greeks has been declining rapidly and consistently, by ~11.6% annually over the last 4 years.
Vulnerable groups (age and gender) have seen considerable employment improvements (female unemployment from 20.7% in 2020 down to 10.6% in 2025, youth unemployment from 40.5% in 2020 down to 19% in 2025).
Labour market slack (all persons who have an unmet need for employment, including unemployed people) in Greece saw the strongest decrease among EU countries, dropping from a top of 34.3% in 2013 to 14.4% in 2024, which is now inches above the EU average.
Further reading: ELSTAT’s lengthier-than-usual note on unemployment from last September makes for a really good read.
3. Inflation finally starting to ease
Inflation is Greece (primarily in the food category) had stayed relatively high in the post-COVID era, lingering between 2% and 4% for almost three years.
Thankfully, Q3 2025 has shown early signs of easing in domestic inflationary pressures, with inflation dropping to 1.8% in September from 3.1% just a month earlier.
Greece had one of the lowest annual inflation rates across the entire EU in September 2025.
This is a welcome change. However, given the already high level of prices today in Greece, the trend will have to continue for at least one more quarter in order to be felt on a local household level.
4. Debt reduction is a true success story
Greece’s debt ratio is finally expected to fall below pre-crisis levels this year.
In fact, if Greece’s debt-to-GDP ratio reduction continues on the current trajectory, it will fall below both that of Italy and the US before 2030.
Just a few days ago, Greece announced another large reduction of its debt profile. In December, the Public Debt Management Agency (PDMA) will proceed with the early repayment of €5.29 billion from loans of the first Greek bailout, immediately reducing the country’s debt by 2.2% of GDP and saving 150 million euros in interest over a 12-year period.
5. Trade (im)balance still a fundamental problem
Greek imports continue to hover significantly higher than Greek exports in 2025, which is in line with historical trends.
While the latest reading from August recorded a 18.8% decrease in the trade deficit, the lingering trade (im)balance presents a fundamental problem for the country.
Unfortunately, the first quarter of 2025 has found Greece with a widening current account deficit yet again, continuing on its decade-long historical trend.
The gap between exports and imports has been widening.
If only look at the share of services exported outside of EU by large enterprises, a key metric of exportability, we see that Greece had the lowest percentage (3.3%) across the entire European Union.
6. Stock market leading the way
The Athens Stock Exchange (ATHEX) has returned an impressive ~40% year to date, surpassing all other European peers.
This is on track with the 3 year and 5 year annualized performance of Greece, which has consistently achieved the highest returns in Europe.
More impressively, ATHEX has achieved an unprecedented 11 straight months of gains (i.e. no index loses), which is the highest consecutive streak in its history.
There are two interesting developments to note here:
Euronext, the largest stock exchange group in Europe, has made a public offer to acquire 67% of ATHEX’s management group. This is an ongoing process set to close in November.
FTSE Russell has upgraded the Greek capital market from “Advanced Emerging Market” status to the “Developed Market” category.
Further reading: A series of great recent posts (one, two, three) by Sofokleous Street on the Greek stock market.
6. Poverty reduction is real, but uneven
Let’s start by looking at the in-work poverty rate.
This indicator measures the share of persons who are employed and have an equivalised disposable income below the risk-of-poverty threshold.
The in-work poverty rate has been falling continuously in the past decade, reaching the lowest percentage for the totality of Greek workers in 2024. The trend also holds true for temporary and part-time workers, but with more ups and downs.
At the same time, the broader at-risk-of-poverty trends have showed a considerable slow-down in improvement, and in some cases even minor reversals.
While social conditions in Greece have clearly improved since 10 years ago, there is still tremendous strain that is unevenly split across poor and lower income families.
7. Productivity remains exceptionally low
Greece’s labour productivity per hour worked is pretty abysmal.
Borrowing from the latest European Commission country report for Greece:
“Based on 2024 data, Greek per capita GDP in purchasing power standards is the second lowest in the EU, at only 70% of the EU average. Greece’s labour productivity per hour worked was the lowest within the EU, reaching only 56.2% of the EU average in 2023.”
Since 2009, the productivity of the Greek economy has fallen by -16%. Almost all sectors have recorded productivity losses.
The largest losses (1/3 of the total) were recorded by the “Accommodation and Food Services” (AFS) sector (-5.2%). If we included real-estate in the equation, the total figure would have been even more startling.
Interestingly, the deteriorating level of Greek productivity is also linked with the high cost of living faced by most Greeks today.
Greece’s unit labour cost competitiveness improved marginally in Q2 but remains exceptionally low, downward-spiraling and significantly lower than EU average.
Is there a silver lining? Perhaps, if we look at real GDP produced per Greek worker, which is a key measure of labour productivity.
According to a study produced by Eurobank’s research economist Stelios Gogos, we have one very negative and one very positive result.
A very negative result:
“Labor productivity and demographic trends are thorns in the Greek economy. Cumulatively, they explain over 80% of the deviation of real GDP in 2024 compared to the 2008 peak. Therefore, to the question of why real GDP in Greece is 15.1% lower than the 2008 peak (16.4% based on the difference in natural logs), the answer given is that the product produced by the average employee in Greece is considerably smaller compared to pre-crisis debt levels (e.g. due to a decrease in natural capital per employee and the high long-term unemployment of previous years), while the population has also shrunk, reducing the resources available to the labor force and employment pools.”
A very positive result:
“During the period of the Greek economic recovery (2017-2024), the average annual change in real GDP was 1.8%. The increase in the employment rate, i.e. the decrease in the unemployment rate, explains almost entirely this result. The population continued to move downward, while labor productivity in 2024 was marginally lower than 2016 levels. However, in the last two years (2023-2024), the average annual increase in real GDP (2.3%) did not come only from the strengthening of the employment rate but also from the increase in labor productivity and the participation rate of the population in the labor force.”
That last part is crucial. It means that we have started witnessing a recent yet very important reversal of fortunes in terms of labour productivity and its contribution to the overall GDP of the country.
8. Business sector keeps growing, despite international pressures
Business sector sales continue to grow, although at a smaller pace than previous years. 2025 is expected to end with €388 billion in sales revenue, which is almost 60% greater than in 2019.
The IT sector continues to dominate, led by continued domestic demand for the digital transformation of the state and industry (fueled by EU funds).
One of the most positive developments: extroversion of Greek businesses has been increasing, reaching 24% of period sales in 2025 and only inches away from the 26% EU average.
9. Investments keep coming in
Gross Fixed Capital Formation (GFCF) has increased by 6.5% y-o-y and 7.4% q-o-q in Q2 2025, reaching a 15-year high of 16.6% of GDP.
Majority of investments are still concentrated in real estate, although more productive sectors (like industry) are picking up too.
According to EY’s 2025 FDI attractiveness survey, 48% (one in two) respondents stated that their company plans to establish or expand operations in Greece over the next year. This is the second highest number recorded after last year’s 51%.
10. Energy situation pretty mixed
Since 2023, Renewable Energy Sources (RES) has been the top energy source covering electricity demand in Greece, taking over the fossil/gas category.
Crucially, Greece has been a net exporter of electric energy over the past two years, which shows the growing strength of the domestic energy capacity.
At the same time, RES curtailments (i.e. the involuntary reduction of electric generator output to maintain grid stability) have gone through the roof.
This is extremely concerning. It means that our energy grid is overly constrained and tremendously inefficient, leading to an unbelievable amount of “lost energy”, while at the same time overburdening consumers with variably high prices.
Greece desperately requires better energy storage facilities.
Further reading: The Greek Energy Market Report (2025) from the Hellenic Association of Energy Economics has a ton of relevant data for anyone more interested in the topic.
11. (Lack of) island infrastructure clashes with tourism boom
Greek tourism industry continues to grow in terms of arrivals and revenues generated, but it is facing important capacity constraints and has led to growing calls of addressing its most harmful effects.
Greece’s famous island archipelago is the most exposed, threatened by continuously worsening problems of overcrowded-ness, unchecked hyper-construction and an overall lack of proper public infrastructure (that is already crumbling during the overloaded summer months).
According to data from NBG, Greek islands received 11% of total arrivals across the entire global island tourism industry in 2024.
So far this year tourism revenues in the period Jan-July 2025 have reached €12.1 billion, up 12.5% or €1.35 billion compared to the corresponding period in 2024, with cruise revenues recording an increase of 23.1%. (INSETE)
Greek islands (and the mainland) experience more than twice the population increase that the Spanish islands (and mainland) receive during the July-August high season period. At the same time, they receive almost half the infrastructure investment per capita.
In simple terms, Greek islands are both overburdened and underinvested.
NBG estimates that Greece will need to invest €35 billion by 2035 (€3.5 billion per year x 10 years) to get the country’s existing infrastructure in the islands on par with rising demand. This is an extra €1.5 billion per year on top of annual existing investments of €2 billion.
The biggest risk today: unclear responsibilities (Ministries vs regional councils vs. local municipalities vs. Technical Chamber) that lead to significant delays and many much needed infrastructure projects not making it past planning phases.
12. A fragmented political landscape of low trust
The centre right government of Nea Dimokratia (ND) continues to maintain a lead in national polls. This lead is now narrower than in past years (down to 25-30% from ~40% only two years earlier) and subject to growing headwinds.
The opposition is fragmented and smaller parties remain in a volatile state. There is not a single serious contender against ND to have emerged in the past 6 years of its ruling. PASOK has failed to offer a strong alternative, hovering below 15% for more than a year, and sending mixed signals. SYRIZA fizzled out to 5-7% after the departure of Alexis Tsipras (who, for unworldly reasons that only he seem to possess, has decided to make a political comeback).
A number of highly populist ultra right wing parties (e.g., Hellenic Solution, polling at 10-12%) and hyper left wing parties with a twist (e.g., Plefsi Eleftherias, polling at 8-10%) have won over disaffected voters from both sides of the ideological spectrum. The Communist Party (KKE) remains the most consistent presence (polling at 7-10%).
Public trust in political parties is strikingly low across the board, a trend which underscores the wider malaise beyond any one party’s political fortunes.
Ultimately, there are two big questions lingering in the minds of any analyst or investor concerned with Greek politics: (1) since the prospects of ND to form a majority in the next election seem very slim, who would PM Mitsotakis have to partner with to remain in power? And (2) how (if at all) will the government be able to handle growing voter discontent around the cost of living crisis and the deepening mistrust in its own governance, as well as other public institutions, such as the justice system, without rushing to early elections?
Conclusion
Greece’s macroeconomic fundamentals present a mixed yet resilient picture.
Outside the messy political realm, I still see the macro picture half full, although the velocity of growth and the pace of real reforms have both slowed down.
Compared to the rest of Europe today, as well as its former self, Greece’s troubles continue to be outweighed by the positive momentum. Let’s hope this lasts.
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Very interesting, thank you for this analysis!