Greece’s economic recovery looks good on paper but that’s not whole picture

Greece, once the epicentre of the eurozone debt crisis, has achieved a remarkable macroeconomic turnaround over the past five years. Following the global turmoil of the 2020 pandemic, the country transformed from the EU’s primary source of economic vulnerability into a resilient member state, defying the expectations of many skeptical analysts. However, while international markets recognise this fiscal stabilisation, a stark divergence remains between headline economic indicators and the domestic reality as experienced by ordinary citizens, who argue that the statistics do not reflect their daily challenges. On the macroeconomic front, Greece’s recovery since 2020 is built on three achievements. First, the country has consistently outperformed the eurozone in growth rates. Following the pandemic-induced contraction, real GDP rebounded, recording an expansion of 2.1 per cent in both 2024 and 2025, which is higher than that of major European partners such as Germany and France, which faced near-stagnation. Second, this momentum has triggered significant credit rating upgrades. Major international rating agencies restored Greece to investment-grade status, signalling a substantial renewal of market confidence on one hand, and unlocking, on the other hand, large funds from institutional investors who were previously restricted from investing in Greek bonds. Third, initiatives for aggressive debt reduction and fiscal consolidation have radically reshaped the country’s balance sheet. The debt-to-GDP ratio fell by approximately 50 percentage points from its peak of around 212 per cent in the first quarter of 2021, fuelled by fiscal discipline, primary surpluses and a welcome drop in unemployment from a historic high of 28 per cent in 2013 to single digits. However, these successes reflect only half the truth. Despite favourable indicators, there are friction points threatening long-term stability, most notably the relatively limited purchasing power. Although rapid growth is observed, Greece’s GDP per capita and average wages, adjusted for purchasing power parity, remain below the EU average. Furthermore, the high cost of living exacerbates challenges for citizens. Persistent inflationary pressures, skyrocketing rents, particularly in urban centres, including Athens, and increased energy costs practically wipe out nominal wage increases, leaving households with little disposable income. Additionally, long-standing structural problems overshadow the long-term sustainability of the domestic economy, which remains overly dependent on volatile sectors with relatively low added value, such as tourism and shipping. With the winding down of temporary support from the EU’s Recovery and Resilience Facility, which has heavily subsidized recent infrastructure investments, the lack of meaningful economic diversification into, for example, high-tech or manufacturing fields is likely to slow down progress. In conclusion, Greece’s trajectory after 2020 demonstrates that structural fiscal consolidation is feasible, even after a decade of severe economic hardships. However, until positive macroeconomic performance translates into everyday prosperity for its citizens, higher purchasing power and a resilient labour market that retains local talent rather than fuelling a brain drain, the recovery of the Greek economy remains an unfinished project.