EU’s Recovery and Resilience Facility (RRF) nears its effective conclusion next year. Credit: Greek Ministry of Culture
A growing chorus of economic analysts is raising concerns over the sustainability of Greece’s GDP growth, particularly as the massive financial boost from the EU’s Recovery and Resilience Facility (RRF) nears its effective conclusion next year.
The Greek economy, though it enjoys a period of expansion, is showing signs of fatigue, according to the Foundation for Economic and Industrial Research (IOBE). Professor Nikos Vettas, the Director General of IOBE, issued a stark warning: the annual GDP growth rate could gradually decline toward a meager one percent over the next five years once the RRF funding tap is turned off.
Key concerns from top economic bodies
Leading institutions are all highlighting the same critical challenge: sustaining momentum without the extraordinary EU support.
IOBE’s recent report centers on one core issue: how to fundamentally boost investments in Greece, especially after the RRF period ends. This concern was recently echoed by Bank of Greece Governor Yannis Stournaras during a speech at the University of Athens.
The European Commission projects Greece will grow slightly above two percent annually between 2025–2027. However, it forecasts that growth will then fall below two percent due to chronic structural issues, chief among them an aging population and dysfunctions in the labor market.
The OECD currently forecasts Greek growth at 2.1 percent for 2026, crediting the RRF. Yet, it suggests that maintaining this pace in subsequent years will be difficult, implying downward revisions in its future growth predictions.
Related: Tourism Alone Won’t Save Greece: Why a Complex Economy Is Urgently Needed
Greek economy: The investment conundrum
The RRF’s power as a growth catalyst is undeniable. Capital Economics estimates the Next Generation EU (NGEU) program, which includes the RRF, will boost the GDP of Southern European countries by 1–1.5 percent over its six-year run. The funds have been a crucial lever, particularly for digital and green investments.
IOBE projects total investments to increase by 7.5 percent this year and a sharp 10 percent in 2026, clearly driven by the RRF’s peak period. The problem, as analysts emphasize, is what happens after the current boom cycle. While the NGEU program officially concludes in 2026, analysts believe its positive effects will continue to diffuse over the following years, preventing a rapid “hard landing” for investment activity.
The challenge for the Greek economy
The immediate challenge, IOBE asserts, is to strengthen the Greek economy in a way that allows for sustainably high growth rates in the medium term, amid significant global instabilities.
The biggest bet for the coming years is the transition to a new, sustainable, productive model. This new model must be fundamentally based on:
Technology and innovation
Export growth
Increased savings
A shift to higher value-added products
The RRF has been an essential investment tool, but its true effectiveness will only be measured by whether it successfully catalyzes this necessary transition, allowing Greece to stand on its own feet once the massive influx of EU capital subsides.
Related: Greece Has Become a “Café Economy,” LSE Study Finds