A new report by Goldman Sachs comes to shake the waters despite the positive course of the Greek economy so far. After years of recovery and impressive performance, the American firm warns that a “triple bomb” is now in full countdown, the ineffective judicial system, the suffocating situation in the real estate market, and the serious skills mismatch in the labor market. Three weaknesses that, as Goldman Sachs stresses, have the potential to derail growth, limit competitiveness, and overturn the gains of the past six years. Specifically, regarding the positives, the American firm notes that Greece’s economic activity remains strong, with key indicators signaling continued expansion. Greece’s GDP continues to grow at a rate higher than the Eurozone average. The Goldman Sachs Current Activity Indicator (CAI) indicates economic resilience compatible with a growth rate above 2%. Since 2019, productivity has steadily recovered. Per capita GDP has recorded the highest growth in Southern Europe, surpassing the Eurozone average. In addition, investments excluding housing have returned to 2009 levels, more than 15 years after the Global Financial Crisis (GFC). All components of gross fixed capital formation have increased since 2019. At the same time, the employment rate stands at record levels.
Fiscal prudence
According to the investment bank, fiscal policy in Greece remains particularly prudent, reflecting a steady effort toward fiscal consolidation and stabilization. The country’s primary balance is among the highest of the small member states of the European Union and stands significantly above the Eurozone average, confirming the economy’s return to a surplus trajectory. With the progress achieved and ongoing reforms, the debt-to-GDP ratio is projected to decline to the point that, by 2028, it will fall below that of Italy, a development that will signal a significant improvement in the country’s creditworthiness. At the same time, Greece benefits from the lowest real borrowing cost in the Eurozone, as approximately 70% of public debt remains secured through very long-term European support programs. This particular financing structure offers stability, reduces refinancing risks, and enhances the economy’s resilience in periods of international uncertainty.
Three key challenges
Despite the positive outlook, according to Goldman Sachs, Greece is called upon to manage three key challenges in order to maintain its growth momentum and strengthen its long-term competitiveness.
First, the real estate market remains crucial. The much-anticipated recovery in the housing and office sectors is necessary both to address the severe housing shortage and to prevent further overheating of prices, which already pressures households and businesses. A balanced market can serve as a stabilizing factor for the broader economy.
Second, the skills mismatch constitutes a significant developmental barrier. Despite historically high employment levels, a disproportionate share of educated workers remains underemployed, a phenomenon indicating that the labor market does not fully utilize the country’s human capital. Targeted reskilling and upskilling initiatives are essential to bridge this gap and support the transition to a more productive growth model.
Third, the ineffective judicial system continues to act as a drag on investment. Particularly in commercial cases, the long delays and the time needed to resolve civil and administrative disputes, among the highest in the Eurozone, discourage businesses and investors. Accelerating and modernizing the justice system is a critical reform to bring investment levels in Greece closer to the European average and to strengthen economic activity.
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