The Greek economy is facing a “complex set of challenges” despite recent progress and the expected continuation of its growth momentum, according to the governor of the Bank of Greece, Yannis Stournaras.
Writing in the BoG’s Interim Monetary Policy Report, published on Monday, he notes that demographic and labor pressures can be eased by increasing immigration and getting more Greeks to return from abroad.
The report specifically warns of the risks of a slowdown in growth after the expiry of the Recovery and Resilience Fund, of the investment gap, pressures on the labor market and real incomes, the difficulty of finding affordable housing and the demographic crisis.
Stournaras proposes deeper reforms in the goods and services markets, a more efficient state, faster administration of justice, clamping down on corruption and slashing bureaucracy. He calls for targeted incentives for investments, a reduction in non-salary costs, comprehensive use of European financial instruments, supply-side interventions to address the problem of affordable housing, wage increases compatible with productivity developments and increasing the participation of women, young and older people and retirees in the workforce.
On the demographic problem, the report notes, a coherent set of social and development interventions is required: investment in childcare, flexible forms of employment, support for housing for young families, and strengthening health and care services. The integration of immigrants and the repatriation of Greeks abroad can strengthen human capital, adds Stournaras.
The BoG forecasts growth of 2.1% in 2025, 2026 and 2027 and a decline to 2% in 2028, slightly lower than the government forecast for 2025 (2.2%) and 2026 (2.4%), but higher than 2027 (1.7%) and 2028 (1.6%).
Investments will increase by 7.3% in 2025-2026 (against a government forecast for 5.7% and 10.2%) it says, but the rate will ease in 2027-28. Inflation will remain high (2.8%) this year and decline to 2.1% in 2026, stay put at 2.2% in 2027 and accelerate in 2028 to 2.5%.