Despite the positive picture recorded by the main macroeconomic indicators, the Report of the Parliamentary Budget Office of the Hellenic Parliament highlights a series of structural weaknesses and risks that threaten the sustainability of the Greek growth path in an increasingly unstable international environment.
In particular, although headline inflation shows signs of de escalation, core inflation remains persistently high, mainly due to price increases in services.
“In Greece, from mid 2024, inflation shows signs of resilience despite the strong emerging trend of returning to the 2,0% target from the beginning of 2024.
Inflation (annual percentage change of the Harmonised Index of Consumer Prices) rose in November 2025 to 2,8% according to data from the Hellenic Statistical Authority, slightly reduced compared to November 2024 (3,0%). However, it appears increased compared to the previous month (1,6%).
Food inflation rose in November 2025 to 2,7%, compared to 2,4% in the Eurozone.
Core inflation (excluding energy and unprocessed food) stood at 2,7% in November 2025, reduced compared to November of the previous year (3,6%) and increased compared to the previous month (1,7%),” it is noted.
On the other hand, the concentration of significant weight in sectors with increases clearly higher than the average index limits the reduction of overall inflation and maintains strong pressure on household disposable income.
Particularly worrying is food inflation, which in Greece remains higher than the Eurozone average.
This disproportionately affects lower income strata, widening social inequalities and reinforcing the risk of impoverishment.
Growth based on temporary and vulnerable pillars
The Office’s baseline estimate for the 2025 GDP growth rate remains at 2,2%.
For 2026, the Office’s baseline estimate stands at 2,1%, with a forecast range of 1,9%-2,6%.
However, the current resilience of economic activity is not based exclusively on sustainable fundamental factors.
As the report notes, a large part of global and European growth is due to temporary mechanisms, such as the early acceleration of consumption and investment ahead of tariffs, inventory accumulation, and the absorption of increased costs by profit margins.
As these factors are exhausted, intensifying protectionism and geoeconomic fragmentation threaten exports, investments, and ultimately the growth rate, especially for a small and open economy such as the Greek one.
High public debt undermines productivity
However, a central and particularly worrying finding of the report is the negative relationship between high public debt and productivity.
The Office’s empirical analysis shows that when the debt to GDP ratio exceeds the 90%-105% threshold, the impact on productive capacity becomes clearly negative.
For Greece, the period after 2009 was characterized by an explosive increase in the debt to GDP ratio, which was associated with losses of more than 13% in total productivity and almost 13% in labor productivity relative to the long term trend.
This finding undermines the ability for sustainable GDP growth and limits the prospects for substantial wage increases.
The report notes that the transition to a high debt regime is accompanied by a significant decline in the share of private investment in GDP, from 13,8% to just 8,9%.
This development reflects both the increased cost of financing and the distortionary fiscal policy imposed to manage debt.
Higher taxes on labor and capital, combined with cuts in productive public spending, reduce the net return on investment and discourage entrepreneurial activity, trapping the economy in a vicious circle of low growth.
Fiscal risks and lost effectiveness
Despite the increase in tax revenues, the primary surplus appears reduced compared to the previous year, while government expenditures are rising faster.
At the same time, Greece continues to lack a mechanism for evaluating the effectiveness of an exceptionally large number of tax exemptions, with a total cost exceeding 22 billion euros for 2024.
The absence of systematic evaluation limits the ability for targeted fiscal policy and increases the risk of revenue loss without developmental return.
Finally, the report indirectly sounds the alarm for the post Recovery Fund era.
Without sufficient large scale private investment projects, the Greek economy risks facing a growth gap.
High energy costs, the lack of specialized human capital, regulatory uncertainty, and the adverse international environment constitute serious obstacles that remain largely unresolved.
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