The European Commission’s 2026 Country Report on Greece notes the Greek economy’s strong performance following the pandemic, while noting, however, that the country continues to face structural weaknesses that limit long-term convergence with the rest of Europe.
Greece appears to be growing at a rate higher than the EU average, significantly reducing public debt, and boosting investment, mainly through the Recovery Fund. At the same time, however, the Commission warns that the production model remains overly dependent on low-value-added sectors, while low productivity, the high current account deficit, and weaknesses in the judiciary and public administration continue to weigh on competitiveness.
Growth above the European average
The Commission notes that real GDP grew by an average of 2.1% annually during the 2023–2025 period, compared to approximately 1% in the EU. Growth of 1.8% is projected for 2026, driven by investment and consumption, although the Commission estimates that the energy crisis will weigh on economic activity during the year. In 2027, the growth rate is projected to slow to 1.6% as the implementation of the Recovery Fund comes to an end.
Greece ranks among the top five EU countries in terms of absorption of cohesion funds for the 2021–2027 period, while the Recovery Fund is estimated to boost Greek GDP by nearly 4.5% in 2026 compared to a scenario without these interventions.
Despite the improvement, the economy has not yet recovered from the losses of the debt crisis. Real GDP in 2025 remains nearly 14% below the 2008 level, while per capita income amounts to just 68.4% of the EU average. Long-term real growth is estimated at around 1.5%, marginally above the EU average, suggesting slow convergence.
Debt is falling, but the external deficit remains high
The report notes a significant decline in public debt, which fell to 146.1% of GDP in 2025—nearly 43 percentage points lower than its pre-pandemic peak (in 2018). The Commission forecasts a further decline to 140.7% in 2026 and 134.4% in 2027, thanks to high primary surpluses, strong nominal growth, and prudent debt management (including early repayments). Debt, however, remains the highest in the EU.
The current account balance remains a key weakness. The deficit narrowed to 5.7% of GDP in 2025, but the Commission considers it to remain high, reflecting the economy’s low non-cost competitiveness and dependence on imports.
The Commission emphasizes that the economy continues to rely on low-value-added sectors, such as tourism and agriculture, as well as on small and medium-sized enterprises with limited international presence and an inability to achieve economies of scale.
Investment gap and low productivity
The Commission acknowledges that the investment gap relative to the EU has halved since 2018, as the investment-to-GDP ratio rose from 11.3% to 16.9% in 2025, with investment in machinery and equipment exceeding the EU average from 2022 onward. However, investment in intellectual property remains low, limiting innovation and productivity.
Labor productivity stands at just 54.6% of the EU average, despite the fact that workers in Greece log the most hours worked per employee in the Union.
Particular emphasis is placed on the weaknesses of the education system and the skills mismatch. The Commission notes that 80% of businesses report that the lack of skilled personnel is an obstacle to investment, while adult participation in lifelong learning remains low. It is also noted that the lack of adequate childcare and eldercare facilities limits women’s entry into the labor market.
Housing crisis and rising prices
The report devotes a significant section to housing. Housing prices rose by 7.8% in 2025, following a 9.1% increase in 2024, while prices and rents are rising faster than incomes. Despite the absence of a credit-fueled “bubble,” the Commission sees signs of overvaluation.
The pressures are attributed to both strong demand and low supply, following years of underinvestment in construction. Foreign demand—which had been boosted by the Golden Visa program—moderated in 2025 due to stricter Golden Visa and short-term rental regulations. Although residential investment has been rising since 2020, it remains at about 60% of the EU average.
At the same time, the housing crisis is deepening regional inequalities, as access to affordable housing varies significantly between urban and rural areas.
Non-performing loans and the justice system: a “burden”
Although banks’ non-performing loan ratios declined further in 2025, the Commission notes that the total stock of “red” loans in the economy remains essentially unchanged when loans managed by servicers are taken into account, continuing to weigh on private-sector balance sheets. At the end of 2025, servicers were managing loans totaling €80 billion, equivalent to 32.2% of GDP.
The Commission identifies as key obstacles the lack of information on the status of foreclosed properties, the lengthy duration of post-auction judicial dispute resolution, and delays in recording transactions in the Land Registry. It also highlights that the judicial system continues to be characterized by time-consuming procedures and inadequate or incompatible digitization, despite recent reforms.
Business environment: Progress, but obstacles remain
The Commission acknowledges progress in the digitization of public administration and in facilitating business start-ups—Greece is among the top EU countries for business registration, with three procedures and completion in three to four days. However, it emphasizes that administrative and regulatory burdens, as well as licensing requirements in several sectors, remain prohibitive.
According to the European Investment Bank, 89% of Greek businesses view regulation as an investment barrier, compared to 69% in the EU. Particular mention is made of the high barriers to entry in professional services (lawyers, architects, engineers, accountants) and in retail trade, as well as time-consuming environmental permitting processes.
The Commission notes that only about 20% of Greek territory is currently covered by approved local urban planning schemes, with the goal of expanding coverage to ~80% of municipal units through the Recovery Fund.
Weak innovation and digital lag
Despite the boom in the startup ecosystem—over 90 startups raised €555 million in 2024, a 15% increase—venture capital investments remain well below the EU average. Corporate investment in research and development accounts for 0.9% of GDP, compared to 1.5% in the EU.
The Commission notes weak links between universities and businesses, limited commercialization of research, and fragmented governance of research policy. Notably, only 8.93% of businesses in Greece used artificial intelligence technologies in 2025, compared to nearly 20% (19.95%) in the EU.
Energy transition and dependence on fossil fuels
The Commission acknowledges progress in renewable energy and interconnections, with the Recovery Fund having delivered over 7.5 GW of new installed renewable energy capacity. However, it calls for accelerated progress in energy storage, greater penetration of offshore wind power, and a recalibration of energy taxes to boost electromobility.
At the same time, it is emphasized that the economy remains heavily dependent on fossil fuels, a fact that makes it vulnerable to energy disruptions. Notably, to address the rise in fuel prices caused by the war against Iran, a temporary support package amounting to approximately 0.2% of GDP (April–May 2026), including a fuel subsidy, a targeted fuel pass, and support for fertilizers and transportation. The transportation sector remains the primary source of greenhouse gas emissions.
Demographic and climate crisis
The report notes that population aging and a shrinking labor force pose a significant threat to long-term growth. The working-age population is projected to decline by about one-third by 2070, while the demographic shift particularly affects regional areas, with labor shortages mainly in tourism and construction.
At the same time, climate change is increasing economic costs, with Greece ranking among the EU countries most exposed to floods, heatwaves, wildfires, and drought. The Commission emphasizes that the annual investment needs for climate change adaptation—particularly in water infrastructure due to severe water scarcity—are among the highest in Europe, while the gap in private insurance coverage against natural disasters remains significant.