The 2026 state budget, submitted to Parliament by Greece’s finance minister, is presented as the clearest proof yet that the country has finally stepped into a new phase of economic expansion. After a decade defined by the harsh austerity programs known internationally as the “memoranda,” Greece now projects growth above the European average, rising investment, declining debt ratios, and strengthening wages. In macroeconomic terms, these are the numbers of a country turning a page.
Yet the same budget also attempts to respond to growing criticism aimed at the government: that while the data may suggest the economy is improving on a national scale, life on the ground for households and workers is not easing. If anything, pressure on the real economy keeps intensifying.
The figures tell a more complicated story. Growth is tied to unstable factors. Greece’s long-promised convergence with the rest of Europe remains fragile. And the daily experience of Greek households does not match the optimism conveyed by macroeconomic indicators.
In fact, when the budget’s numbers are placed alongside the latest findings from Eurostat, the OECD, the European Central Bank (ECB), and other international institutions, they reveal seven core weaknesses — seven “wounds,” as many analysts put it — that the government will need to confront if it wants to prove that Greece’s recovery is not simply statistical, but real.
Growth Supported by Temporary EU Funds
In presenting the budget, the Finance Ministry highlights a striking figure: investment as a share of GDP is projected to reach 17.7% in 2026, the highest level since 2009. It is, on the surface, an impressive milestone.
But the number does not tell the whole story.
More than 55% of the investment surge recorded between 2021 and 2025 came directly from the European Union’s Recovery and Resilience Facility — commonly referred to as the “Recovery Fund.” This massive post-pandemic program has driven a large portion of Greece’s economic momentum, but it is also temporary. Its disbursements are entering their final phase.
This means that after 2026, Greece will be forced to maintain similar levels of investment using either national financing or more restrictive European programs that lack the flexibility and scale of the current fund.
Even with recent gains, Eurostat data shows Greece remains below the EU average in investment relative to GDP. The danger is clear: the country’s investment boom may prove short-lived, and the current momentum may not translate into a permanent shift.
Higher GDP, But Greece Still Reaches Only 70% of Europe
The budget emphasizes that Greece’s per-capita GDP in constant prices has risen 15.7% since 2019 — a performance roughly three times stronger than that of the eurozone. It is, undeniably, a noteworthy achievement.
But the broader picture dilutes the shine.
Greece still sits at just 70% of the European Union average in purchasing-power terms, making it the second-poorest country in the EU. Despite the progress made since the crisis years, true convergence — the point at which Greek living standards approach European norms — remains distant.
The data underscores a stubborn truth: the journey back to a genuinely higher standard of living is far from complete, and the gap with Europe is proving more persistent than raw growth figures imply.
Wage Increases That Don’t Translate to Real Gains
According to the budget, total compensation in Greece has risen 37% since 2019, while net wages have increased 32%. After the austerity decade, these are politically meaningful numbers.
But three realities sharply limit what these increases mean in practice:
- Greece’s purchasing power remains among the lowest in the EU, at only 73% of the European average.
- Real wages were deeply eroded between 2021 and 2023, with the OECD recording a cumulative loss of around 10% due to high inflation.
- Most of the improvement in net income comes from tax and contribution cuts, not from rising productivity or higher value-added activity.
The result is that wages appear higher on paper, but do not translate into a proportional increase in real disposable income. Prices — especially for food, housing, and energy — continue to rise faster than salaries, leaving households struggling despite the official indicators.
Growth Without Productivity
The economy is expanding, but productivity — the most essential ingredient for sustainable, long-term growth — remains weak.
Greece is still about 20% below the EU average in labor productivity. In manufacturing, performance remains among the lowest in the 27-nation bloc.
The recent GDP growth has been driven largely by:
- post-pandemic recovery,
- a record-strong tourism sector,
- injections from the EU Recovery Fund, and
- consumption supported by government assistance.
What is missing is structural transformation. The country’s economic model has not fundamentally shifted toward higher competitiveness, innovation, or technology-driven output.
Put simply: growth in recent years has not been powered primarily by productive activity. Instead, it has leaned heavily on consumption and large infusions of European financing. Without improvements in productivity, this type of growth cannot be sustained indefinitely.
A Falling Debt Ratio That Masks Enormous Absolute Debt
The government’s strategy of reducing debt as a percentage of GDP is on track. From 154% of GDP in 2025, Greece’s debt ratio is projected to fall to 138% in 2026 — a level that conveys fiscal stability and strengthens the country’s profile in international markets.
But the underlying reality is more sobering.
In absolute terms, Greece’s debt remains extraordinarily high, projected to reach €360 billion in 2026.
The drop in the debt-to-GDP ratio is driven primarily by the rise in nominal GDP and by Greece’s relatively favorable borrowing conditions, which stretch until 2032 thanks to the long-term restructuring that occurred during the bailout years.
The challenge comes afterward.
Starting in 2032, major loan maturities begin, and Greece’s financing needs rise sharply. The current easing of the debt ratio does not resolve the deeper structural questions surrounding long-term debt sustainability once the low-interest “safe window” closes.
Lower Unemployment, But with Precarious Work and Low Wages
The decline in unemployment — from 17.3% to 8.6% — is undeniably one of Greece’s strongest economic accomplishments of recent years. Yet even this success story has a complicated underside.
A significant portion of new jobs are in part-time or flexible forms of employment, which typically offer lower wages and less stability. Meanwhile, the average net salary for full-time workers hovers around €1,050 — far below the European average.
Greece remains the second-lowest country in the EU in terms of average wages.
At the same time, the cost of living — especially energy, food, and housing — absorbs much of the wage increases workers have received. The convergence between earnings and expenses remains distant, leaving many workers feeling as though they are running in place.
A High Cost of Living That Drains Household Budgets
Three additional factors shape the economic reality behind the headline numbers:
- Greece is among the most expensive countries in the EU when it comes to essential goods and services.
- Business lending rates remain above the eurozone average, limiting the capacity of small and medium-sized enterprises — the backbone of the Greek economy — to secure financing for expansion.
- Heavy dependence on tourism makes the economy vulnerable to global shocks and geopolitical instability, both of which can quickly alter travel flows.
Even as Greece projects stability in its public finances, the real economy continues to operate with narrow margins. The disconnect between macroeconomic progress and household experience remains one of the country’s central economic tensions.
A Country That Is Growing — But Still Far From European Living Standards
Taken together, the data from the 2026 budget and the comparative indicators from European and international institutions paint a dual picture.
On the one hand, Greece is clearly an economy that is developing and steadily distancing itself from the hardest years of its crisis. Growth is positive, debt ratios are improving, the labor market is expanding, and investment is gaining momentum.
On the other hand, the country remains heavily dependent on European funds, continues to lag in productivity, has not closed the gap with European living standards, and faces a cost-of-living crisis that undermines the daily lives of households.
