Greece has a rare window of opportunity to lay the foundations of long-term prosperity, the European Stability Mechanism notes in its annual report for 2025, underlining that bridging the significant productivity gap with the eurozone remains a key priority.
The strong rise in investment through the Recovery Fund is expected to direct resources to productive sectors of the economy, creating new and better-paid jobs, the ESM reports. At the same time, it emphasizes that fiscal prudence is still a key pillar of the government’s economic policy.
As for the war in the Middle East, the ESM warns that it is clouding the otherwise favorable macroeconomic outlook for the Greek economy.
Greece’s dependence on energy imports, as well as tourism, makes the country vulnerable to geopolitical developments.
However, it estimates that the country will fully meet its obligations to the ESM and the European Financial Stability Fund (EFSF) in 2026, with the cash reserve remaining at comfortable levels.
Last week the boards of directors of the ESM and the EFSF approved the early repayment of loans of €6.94 billion of the first bailout.
For the past year, the ESM reports: “In 2025, the Greek economy remained resilient despite global uncertainties. Growth outpaced the eurozone average, public debt continued to decline and unemployment fell to its lowest level since the global financial crisis.
The yields of Greek government bonds against the corresponding European securities (spreads) decreased further. Inflation, however, remained close to 3%, while external deficits remained high, despite their significant improvement. Promoting reforms that boost productivity, innovation and resilience to climate change is critical to the country’s future prosperity as Greece faces structural challenges such as climate change and demographic pressures.”
The ESM also positively assessed the efforts to improve the efficiency of the companies in Growthfund’s portfolio with the creation of the new infrastructure investment fund.
