The International Monetary Fund (IMF) Executive Board concluded its Article IV consultation with Greece on March 31, 2025. The findings indicate a positive near-term economic outlook for Greece. Real GDP growth is projected to sustain at 2.1 percent in 2025, driven by investments backed by funding from the Next Generation EU (NGEU) projects. Growth in private consumption is anticipated to remain strong, underpinned by employment and income gains. Meanwhile, inflation is set to resume its downward trajectory as global energy prices stabilize, although core inflation may linger due to inflation in services and wage increases.
Strength in Greece’s banking sector is attributed to a reduction in the Non-Performing Loan ratio to approximately 3 percent, improved asset quality, and enhanced capital adequacy through capital instrument issuances and sustained high profits. The IMF notes that liquidity and funding risks in this sector have significantly decreased.
The IMF identified risks to Greece's economic growth and inflation projection. Potential challenges include a growth slowdown in major eurozone countries, regional conflict deterioration, and global policy unpredictability. Risks to inflation are more upwardly skewed.
The Executive Board commended Greece's economic progress but noted medium-term growth challenges due to lasting crisis impacts and structural imbalances. As NGEU funding phases out, directors emphasized the importance of a strategic policy mix and further structural reforms to sustain growth, ensure fiscal health, and maintain financial stability.
"Directors commended the strong progress on fiscal consolidation, driven by strong revenue performance partly due to recent reforms to reduce tax evasion. They agreed that maintaining primary surpluses above 2 percent of GDP in the medium term will further enhance debt sustainability and build buffers against future shocks," the Executive Board noted in a statement.
The IMF Directors recommended prioritizing public investment in sustainable growth, improving the efficiency of social expenditures, and controlling spending, particularly on pensions and public-sector wages.
Furthermore, they stressed the need for comprehensive reforms to tackle supply-side structural issues, enhance workforce participation—especially among women, and improve workforce skills to boost growth prospects. Reducing regulatory burdens and fostering competition in the service sector were highlighted as means to enhance productivity. Ongoing progress in the digital and green transitions, which would boost productivity, was also noted.
Concerning the financial sector, the Board supported the stability it achieved but called for ongoing attention to vulnerabilities amid accelerating credit growth. They recommended that increased bank profits be used to strengthen capital buffers and enhance loss absorption capacities.