S&P, Fitch, DBRS, Moody’s explain to “N” when Greece could close the gap in per-capita income with the rest of Eurozone

Their communal appraisal is that the Greek system has present won the conflict of stability, but not yet the situation of sustainable convergence. Investments are increasing, unemployment is declining and the fiscal situation supports the country’s credibility. However, productivity, demographics, outer deficits and debased savings are the main inhibiting factors.

More specifically, analysts were asked connected the main situation and accidental for the Greek system going guardant and when Greece could realistically adjacent the spread successful per-capita income with the remainder of the Eurozone.

“External deficits and demographics are the ascendant concerns”

“In the adjacent term, the main situation for the Greek system revolves astir its elevated outer imbalances, characterized by a precocious stock of outer indebtedness and a sizable existent relationship deficit, which exposes the state to shifts successful outer financing conditions and reflects a structural overreliance connected imports including hydrocarbons. Longer term, demographic and clime related challenges are the ascendant concerns, some of which weigh connected imaginable growth. On the different hand, the cardinal accidental stems from the imaginable for sustained fiscal outperformance and the continued execution of concern projects, which are some supporting solid economical maturation successful the adjacent term and steadily improving the government’s indebtedness dynamics, putting the nett debt-to-GDP ratio connected a steadfast downward trajectory and enhancing wide fiscal resilience.

“Based connected our existent projections, while Greece is connected a solid convergence way with existent GDP maturation apt to outpace the Eurozone mean successful the adjacent term, the spread successful per-capita income is substantial and will take a sizeable play to adjacent meaningfully. Realistically, this is simply a multi-decade process, contingent connected maintaining the existent betterment momentum to sustainably rise productivity, continued prudent fiscal policies that support indebtedness simplification and enshrine fiscal space for investment, and successfully addressing semipermanent structural headwinds such arsenic demographic pressures. A important and sustained acceleration successful productivity maturation beyond existent trends would beryllium a cardinal catalyst for narrowing this spread much rapidly.”

“The Greek system is resilient, but further effort needed to execute convergence”

“The Greek system is connected a steady maturation path, contempt the various caller outer headwinds, including geopolitical and trade shocks. GDP maturation has been astir 2% since 2023, supra the eurozone maturation rate. The resilience of the Greek system is chiefly owed to the improving home conditions, the acceleration of investments and improving household sentiment. We forecast maturation to stay astir 2% until astatine slightest 2027, supra the eurozone dynamics. The cardinal maturation drivers will stay the home recovery, benefiting from the past years of the Next Generation concern stimulus, and further betterment successful households’ equilibrium sheets and steady employment growth.

The grounds enactment of the tourism assemblage this year provides support to the export performance, a cardinal publication fixed the still precocious existent relationship deficit.

The fiscal presumption of Greece is among the strongest successful Europe with an wide fund surplus successful 2024 and besides apt this year. The strong starting presumption allows the authorities to instrumentality idiosyncratic income tax cuts successful 2026 without jeopardizing the fiscal targets. The tax cuts, successful turn, will further support the disposable income of households, strengthening the betterment successful 2026 and 2027. The unemployment complaint has declined beneath 10% successful 2025, the lowest complaint since 2008.

At the aforesaid time, the Greek system still has persistent weaknesses arsenic a bequest from the sovereign indebtedness crises. The concern rate, though improving, is still beneath the eurozone average. The home savings complaint is very low, frankincense Greece has a substantially existent relationship deficit, reflecting the imbalance betwixt home savings and investments.

The demographic challenges will intensify implicit the mean to longer term, different lasting adverse interaction from the crises. Against this inheritance the sound fiscal argumentation is simply a very important tool: the accelerated indebtedness simplification since the pandemic will make fiscal space to sorb the aging costs implicit the adjacent decades.”

“The Greek system is connected a steady convergence way towards the eurozone. However, our 2% medium-term maturation imaginable forecast implies that the betterment will take a agelong time. Boosting productive investments will beryllium a cardinal constituent for the convergence process. The Next Generation stimulus has a large publication successful 2025-2026, arsenic Greece is 1 of the astir successful EU countries successful absorbing the funds. The concern boost should prevail beyond 2026 to drawback up with the concern ratios, and ultimately the superior stock of the EU.

The convergence of Greece tin beryllium compared to the Central and Eastern European EU members that joined successful 2004 and 2007. Many of these countries were very successful with a accelerated convergence process based connected FDI inflows, EU transfers and structural reforms that made the home economy, including the labour and merchandise markets much flexible.

In purchasing powerfulness parity terms, which set for the differences successful terms levels crossed countries, Greece is present lone astir 70% of the EU average, while successful 2004 it was adjacent to 100%. Closing the spread will apt take decades. It will beryllium similar a marathon run, something Greece is acquainted with since past times.”

“The main accidental for the Greek system is investment”

“In a word, the main accidental for the Greek system is ‘investment.’ Investment arsenic a stock of GDP was 18% successful 2024, up from 11% successful 2019. Greece is the largest recipient of EU transfers, when you harvester bonzer COVID-recovery grants and loans, and mean EU fund transfers. These funds transmission investments to amended carnal infrastructure, quality capital, and the integer and ecological transitions. They are besides accompanied by structural reforms successful areas similar concern and nationalist administration. Increased concern provides a unique accidental for the Greek system to displacement into higher value-added sectors, summation productivity, and amended semipermanent competitiveness.

While our upgrade of Greece from BBB (low) to BBB successful March 2025 reflected the receding bequest hazard successful the banking system and decreasing indebtedness burden, our Stable Trend remains supported by organization and economical reforms that person enhanced the resilience of the Greek economy.

There are nevertheless lingering structural challenges that constrain the Greek economy. To statesman with, Greece’s nationalist indebtedness ratio is still the highest successful Europe. Likewise, the country’s regulatory situation remains comparatively burdensome, arsenic bureaucratic processes tin interfere with the easiness of doing business. There are besides structural weaknesses successful the Greek labour market, including precocious youth unemployment and skills mismatches, and the state faces superior demographic challenges linked to the aging colonisation and emigration of the younger educated workforce.”

“We expect per-capita income successful Greece to proceed to improve, arsenic reforms and investments heighten the productive capableness of the economy. However, I would not expect Greece to converge towards the eurozone mean connected wealth and productivity metrics anytime soon. GDP per capita successful Greece was astir 52% of the Euro country successful 2024, according to the IMF. This remains beneath 2010 levels (59%).”

Moody’s besides referred to its caller recognition opinion, where it states that Greece “Greece’s recognition illustration is supported by a solid betterment track record, which has led to visible and important improvements to institutions and governance, stronger concern and a healthier
banking sector.”

“Our people of fiscal argumentation effectiveness reflects the strong absorption of the authorities to support prudent fiscal policies, marked by expanding superior surpluses and a simplification successful the indebtedness burden. We spot the committedness to betterment implementation and fiscally prudent policies arsenic credible and strong, supported by the government’s solid parliamentary bulk arsenic well arsenic the wide statement successful society for these policies,” the recognition standing added.

According to the analysis, Greece besides faces an adverse demographic illustration owed to colonisation ageing. “The stock of the working property colonisation successful the total colonisation will shrink by ten percent points until 2050, according to Eurostat projections,” it stated.

Greece, according to the 4 standing agencies, has near the situation epoch down and has built credibility.

However, true European convergence is not a substance of a fewer years. It is simply a long, multi-layered effort that requires steady reforms, productive upgrading, and κοινωνικά resilience — oregon a marathon that lone consistency tin win.