Greece's economy is expanding at a solid pace, but the International Monetary Fund (IMF) is urging the country to maintain reforms and fiscal discipline, according to its latest annual review.
The IMF praised Greece for its continued economic growth, projecting real GDP to grow by 2.1% in 2025, driven by investment supported by European Union funding and steady private consumption boosted by rising employment and income.
However, it also flagged increasing risks, including persistent inflation in services, wage pressures, and a potential decline in EU recovery funds.
In its Article IV report, the IMF highlighted the strengthening of Greece's banking sector.
Nonperforming loans at major banks have fallen to around 3%, while profits and capital buffers have risen above EU regulatory standards. Liquidity and funding risks have "noticeably declined."
However, the IMF warned that inflationary pressures remain a concern.
While headline inflation is expected to continue decreasing as global energy prices stabilize, core inflation is likely to remain persistent due to wage growth and service-sector pricing.
The IMF's executive directors welcomed Greece’s fiscal performance and declining debt-to-GDP ratio, although they cautioned that it remains high.
They credited recent efforts to reduce tax evasion and urged Greece to maintain primary budget surpluses above 2% of GDP in the medium term to ensure debt sustainability and build resilience against future economic shocks.
The board also emphasized the need to prioritize public investment, particularly in green energy and security, while tightening control over pension and public-sector wage spending.
Despite acknowledging recent progress in structural reforms, the IMF warned that long-standing imbalances and the lingering effects of the economic crisis still hinder medium-term growth. The directors called for more aggressive efforts to reduce regulatory burdens and remove barriers to competition, especially in services.
They also advocated for policies that boost labor participation, particularly among women, and improve workforce skills, arguing that such measures could unlock Greece’s long-term growth potential.
The Fund cautioned that failure to act decisively could leave Greece vulnerable to external shocks, ranging from geopolitical tensions to slower growth in the eurozone's larger economies.