The picture the European Commission paints of the Greek economy remains fragile and laden with deep-rooted weaknesses, despite improvements in some indicators, as outlined in its report within the framework of the European Semester. The country’s productive model continues to rely on low-value-added activities, while structural imbalances in the external balance, productivity, and investment keep acting as weights that limit Greece’s convergence with the rest of Europe. At the same time, weaknesses in the justice system and public administration continue to weigh on competitiveness.
Trade Balance and the Productive Model
The current account deficit remains one of the most significant structural weaknesses. Although the deficit narrowed to 5.7% of GDP in 2025, the Commission considers it still elevated, reflecting the economy’s low non-price competitiveness and its persistent dependence on imports.
The Commission notes that the Greek economy continues to rely on low-value-added sectors such as tourism and agriculture, as well as small and medium-sized enterprises with limited international reach and an inability to achieve economies of scale.
The Investment Gap and Productivity
The Commission acknowledges that the investment gap relative to the EU has narrowed considerably since 2018, though it has not been fully closed. The investment-to-GDP ratio rose from 11.3% to 16.9% in 2025, with investment in machinery and equipment exceeding the EU average since 2022. However, investment in intangible assets, such as intellectual property, remains low, constraining the country’s capacity for innovation.
Labor productivity remains particularly weak, standing at 54.6% of the EU average, despite Greece recording some of the highest working hours per employee in the bloc.
Special emphasis is placed on the issue of skills and the education system. Some 80% of businesses report that a lack of qualified workers is a barrier to investment, while adult participation in lifelong learning remains limited. At the same time, insufficient development of childcare and eldercare facilities continues to discourage women from entering the labor market.
Demographics
Population aging and a shrinking workforce pose a serious threat to future growth prospects. The working-age population is expected to decline by roughly one-third by 2070, putting particular pressure on regional economies and creating labor shortages in tourism and construction.
The Climate Crisis
The climate crisis is also driving up economic costs, with Greece ranking among the EU’s most exposed countries to extreme weather events. The Commission stresses that investment needs for adaptation, particularly in water supply infrastructure due to drought, are among the highest in Europe, while the insurance coverage gap against natural disasters remains significant.
Barriers to Business
The Commission acknowledges progress in the digitization of public administration and in easing the process of starting a business. Greece is among the fastest EU countries for company registration, requiring just three procedures and three to four days to complete. However, administrative and regulatory burdens remain substantial, and licensing requirements in many sectors act as a deterrent. According to the European Investment Bank, 89% of Greek businesses view regulation as a barrier to investment, compared to 69% across the EU.
Barriers to entry in professional services and retail remain especially high, while environmental permits continue to be time-consuming. Furthermore, only about 20% of Greek territory is covered by approved local urban plans, with Recovery Fund targets aiming to raise that share to 80%.
Despite a growing startup ecosystem, with over 90 startups raising 555 million euros in 2024, venture capital investment remains below the European average. Business spending on research and development stands at 0.9% of GDP, against 1.5% for the EU.
The Commission also points to limited collaboration between universities and businesses, weak commercial exploitation of research, and fragmented governance of research policy. Only 8.93% of Greek businesses currently use artificial intelligence technologies, compared to around 20% across the EU.
Non-Performing Loans
Although banks’ non-performing loan ratios continued to improve in 2025, the Commission notes that the total stock of bad loans in the economy remains essentially stagnant once portfolios managed by loan servicers are taken into account. At the end of 2025, servicers held claims worth 80 billion euros, equivalent to 32.2% of GDP.
The main obstacles to a faster resolution of the problem are identified as limited information on properties going to auction, lengthy court proceedings following foreclosure, and delays in recording transactions in the land registry. The judicial system continues to be characterized by slow procedures and inadequate digitization, despite recent reforms.
The Energy Transition
Greece has made progress in developing renewable energy, with the Recovery Fund helping to install over 7.5 GW of new capacity. However, the Commission calls for accelerated deployment of energy storage, expansion of offshore wind power, and a revision of energy taxation aimed at promoting electrification.
Despite these advances, the economy remains heavily dependent on fossil fuels, increasing its vulnerability to global energy disruptions. Reflecting this exposure, a temporary support package worth approximately 0.2% of GDP was implemented in April and May 2026 in response to fuel price increases linked to the war involving Iran, covering fuel subsidies, a fuel pass program, and support for fertilizers and transportation.
