Standard & Poor’s recent decision to maintain Greece’s credit rating at stable was no surprise, but it was instructive. It confirmed that the markets view Greece as fiscally disciplined and institutionally credible, yet still in need of deeper structural renewal.
That equilibrium between restored confidence and unfinished reform defines Greece’s economy today. The Governor of the Bank of Greece, Yannis Stournaras, has rightly highlighted that the country is growing “at twice the EU average”—a welcome sign of vitality after years of austerity and stagnation. His optimism reflects genuine progress: Greece has stabilized its public finances, regained market access, and demonstrated resilience.
Yet this encouraging picture must be set within context. According to Eurostat, Greece’s real GDP grew by 2.3 percent in 2023, compared with 1.1 percent across the EU. Forecasts for 2024-25 suggest a similar pattern. But Greece’s GDP per capita, adjusted for purchasing power, remains around 68 per cent of the EU average—almost unchanged since 2019. Productivity per hour worked is roughly 25 percent below the euro-area mean, and while investment has recovered, it still lags the European median.
At these relative rates, convergence with the EU average in living standards could take more than three decades. Stability, though vital, is not the same as transformation that will propel growth rates to higher levels.
From Crisis Survivor to Cautious Reformer
Greece has travelled far since the depths of its debt crisis. Fiscal credibility has been restored, markets have reopened, and inflation has eased. Public administration is more predictable, and investor sentiment has turned markedly positive. Tourism continues to underpin growth, and confidence has returned.
Still, the underlying growth model remains narrow. The tax burden on labor remains heavy; informality persists; demographics and skill shortages weigh on productivity. The economy continues to depend excessively on services and consumption, while lagging in exports and innovation.
Governor Stournaras’s confidence in the recovery is understandable—and, in many ways, justified. But the next stage of Greece’s economic story requires a shift from macroeconomic stability to microeconomic renewal.
The Flattering Denominator
The claim of “twice the EU average” growth must also be read in perspective. With the euro area expanding at roughly 1 percent, Greece’s faster growth partly reflects a weak European baseline. In absolute terms, output remains well below pre-crisis potential. The real challenge is not relative speed but sustainable productivity gains that can lift incomes and competitiveness over time.
The Narrative Gap
Greece’s economic conversation often drifts toward reassurance. After years of volatility, both policymakers and citizens understandably value steadiness. Central bankers, too, must project confidence to preserve trust. But this necessary optimism can sometimes obscure the harder questions—how to broaden the productive base, improve efficiency, and attract high-value investment.
Media and public debate tend to amplify official narratives rather than interrogate them. With limited space for rigorous economic analysis, the nuances of reform are often lost between statistics and sentiment.
Beyond Fiscal Virtue
The fiscal discipline that restored Greece’s credibility should now be matched by a comparable focus on productivity. EU recovery funds provide a rare chance to modernise infrastructure, foster innovation, and deepen export capacity. Ireland’s experience in the 1990s shows how such transitions can be achieved when policy credibility combines with structural ambition.
For Greece, the goal is not merely to grow faster than Europe but to grow differently—with value creation, technology, and inclusiveness at the center.
The Sober Truth
S&P’s “stable” rating encapsulates Greece’s current position: a credible borrower with sound macroeconomic management, yet still searching for the engines of convergence. That is an achievement worthy of recognition—but also a reminder of the journey ahead.
Governor Stournaras’s optimism has its place; it sustains morale and signals continuity. But as Greece moves beyond recovery, the imperative shifts from confidence to capacity—from balanced budgets to balanced growth.
Stability has been earned. The next task is to convert it into structural strength.
