Greece: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Due to Greece's heavy reliance on tourism and the hospitality industry, the country was among the most severely hit by the Covid-19-induced crisis. However, the Greek economy rebounded strongly and GDP reached its pre-pandemic level already in the second half of 2021. In 2022, the overall growth was estimated at 5.2% (IMF): after a better-than-expected performance in the first half of the year owing to rebounding exports and a historical peak of the tourism sector, the rise in energy costs and a worsening external environment hampered growth in the second part of the year. Rising input costs and slowing demand are expected to hinder growth in 2023, with the IMF forecasting a sluggish GDP increase of 1.8%. For 2024, growth is set to pick up moderately to 2.2%, driven by the gradual recovery of private consumption and improving external demand.
The general government deficit decreased from to 2.3% of GDP in 2022 (from 4.6% one year earlier) thanks to the phasing out of pandemic-related measures and the economic recovery, although the measures taken to mitigate the impact of high energy prices (e.g. subsidies to energy users and cuts to indirect taxes on transport services) weighted for around 1.1% of GDP. The general government deficit is expected to narrow further to 1.9% of GDP this year and 1.6% in 2024 (IMF). The public debt-to-GDP ratio stood at 177.6% of GDP in 2022 and is forecast to further decrease to 169.8% in 2023 and 163.8% in 2024 supported by the increase in nominal GDP and lower deficits. Despite the primary surpluses recorded in recent years, the ratio is still among the highest in the world. After being in the target area in 2021 (0.6%), inflation reached a record-high level of 9.2% in 2022 due to rising energy prices and the pass-through to other components. As energy prices stabilise over the forecast horizon and euro area monetary tightening takes effect, inflation is projected to moderate to 3.2% this year and 1.6% in 2024 (IMF).
Weakening job creation and the absence of the indexation of public wages and social benefits are expected to keep nominal wage growth below inflation. Overall, the unemployment rate was estimated at 12.6% in 2022, with employment reaching its highest level since 2010. Nevertheless, Greece is experiencing one of the largest increases in labour shortages among EU countries, especially in the construction sector. The IMF expects the unemployment rate to decrease to 12.2% in 2023 and 11.4% in 2024. According to the latest data by Eurostat, Greece has a real GDP per capita of EUR 17,610, well below the EU average (EUR 27,880).
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 188.77 | 215.02 | 219.24 | 239.30 | 248.27 |
| GDP (Constant Prices, Annual % Change) | -9.0 | 8.4 | 5.9 | 2.6 | 1.5 |
| GDP per Capita (USD) | 17,612 | 20,135 | 20,615 | 22,595 | 23,539 |
| General Government Balance (in % of GDP) | -2.4 | -4.2 | -3.3 | -2.8 | -1.6 |
| General Government Gross Debt (in % of GDP) | 212.4 | 200.7 | 177.4 | 166.0 | 160.5 |
| Inflation Rate (%) | -1.3 | 0.6 | 9.3 | 4.0 | 2.9 |
| Unemployment Rate (% of the Labour Force) | 16.3 | 14.8 | 12.2 | 11.2 | 10.4 |
| Current Account (billions USD) | -13.84 | -15.26 | -21.23 | -19.20 | -14.98 |
| Current Account (in % of GDP) | -7.3 | -7.1 | -9.7 | -8.0 | -6.0 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Traditionally, Greece's economy has been based on agriculture, but nowadays the sector represents only 3.9% of GDP and employs 12% of the labour force (World Bank, latest data available). The country has an agricultural area of around 5,867k hectares and a forest area of 3,901k hectares (FAO). The main crops are tobacco (the third-largest European producer) and cotton. Olives - many of which are used to produce olive oil - are the country's most renowned export crop. Greece has an important sheepherding industry and the fishing sector is well developed in the coastal regions: aquaculture sales climbed to a 10-year high in 2021 (EUR 636 million, up 7% in volume and 10% in value year-on-year (National institute of statistics).
As a result of the country's diversification of the economy, industry has replaced agriculture as the second source of income after services, accounting for 15.3% of GDP and employing roughly the same percentage of the labour force. However, its share was higher before the economic crisis of 2007 (above 20%). Manufacturing is estimated to account for 9% of GDP (World Bank). The main sectors are electronics, transport equipment, clothing manufacturing and construction. Moreover, Greece has the largest maritime fleet in the world.
The service sector accounts for 68.2% of GDP and employs 73% of the labour force. Tourism provides an essential source of income and on its own contributes to almost one-fifth of GDP (the primary sector of contribution to the national economy). The sector directly employs just below 400,000 people, accounting for 10% of total employment in the country. Despite being affected by the COVID-19 pandemic, in 2022 the tourism industry generated a turnover of around EUR 18 billion (in the third quarter of the year, accommodation and restaurant services turnover exceeded 2019 levels). Regarding the Greek banking system, the number of domestic credit institutions was drastically reduced from 35 in 2009 to 15 in 2021, of which nine are commercial and six cooperative banks (European Banking Federation).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 11.6 | 15.3 | 73.1 |
| Value Added (in % of GDP) | 3.9 | 15.3 | 68.2 |
| Value Added (Annual % Change) | -2.5 | 10.7 | 7.9 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025
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The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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