Prime Minister Kyriakos Mitsotakis met with the Secretary-General of the Organisation for Economic Co-operation and Development (OECD), Mathias Cormann, at Maximos Mansion. The OECD Secretary General presented the OECD’s periodic Economic Survey of Greece. The Prime Minister’s statements after the presentation of the report follow:
Well, dear Secretary General, dear Mathias, it’s a great pleasure to welcome you here in Athens, joined by your team and by our excellent Ambassador. Dear George, thank you for the work you’ve done. The launch of a country survey is always a big event. Again, thank you for the highly interesting and insightful presentation.
I think it’s a presentation that acknowledges the very substantial progress that Greece has made over the last five years. But it also presents, and that is where I find it in being particularly valuable, useful proposals regarding a future course of action. I think there’s no doubt, and I think this is confirmed by the study, that the Greek economy today is in a much, much better shape than it used to be five years ago.
This progress is actually making a real difference in our citizens’ living standards, as evidenced by the decline in unemployment, but also the rise in real wages presented in the survey, particularly for the years 2023 and 2024. We should not forget that the economy has created 500,000 jobs over the past five years.
Having said that, I also agree that there is still a lot to be done to achieve the convergence of our citizens’ living standards with the OECD and of course, the European average.
To achieve this convergence, which has been the main goal of our government and the central theme of our four-year mandate, we need to maintain the policy pillars that have served Greece so well since 2019. These are pointed out in the survey: sound fiscal policy, continued improvement in financial conditions, and very, very importantly, implementation of growth, but also inclusiveness enhancing reforms.
Following the pandemic shock of 2020, Greece has been consistently outperforming the EU average growth, but also the OECD average growth by a significant margin. At the same time, our economic activity is very quickly rebalancing more towards investment and exports, with Greece being the EU country with the highest growth in investment volume since 2019.
Now, also, the composition of our economic activity has been gradually changing. Share of industry and manufacturing has been increasing, both in terms of GDP and in terms of employment. And all in all, this process of convergence has been set in motion. And this is also reflected in the survey’s estimate of strong growth in potential output, denoting an acceleration in Greece’s productive capacity.
I think you rightly point out that growth has resulted in a very significant reduction in unemployment, which is now half of what it was in 2019. One needs to point out that these employment gains are more pronounced among women and among the young. It is also positive to see that labour market participation is increasing among these groups. I think it’s encouraging to see that pensioners are returning to the labour market, following the provision of suitable incentives last year.
On the fiscal front, Greece has returned to primary surpluses. In 2024 and 2025, we do expect a headline deficit close to zero, while the debt-to-GDP ratio is declining at a very fast path.
You highlighted the very significant developments in our banking sector, which have been positive as a cleanup of the crisis legacy is now advanced. Banks are financing the real economy at a gradual pace. They need to do much more. We’ll talk about that in more detail over the next days.
The improved growth, financial and fiscal outlook of the country, combined with the credibility of our economic policy, has resulted in a marked improvement in Greece’s market standing, it’s sovereign borrowing terms. We have regained investment grade, which was the main goal that we had set out before the 2023 elections. Our government bond yields, dear Mathias, have been declining, probably at a faster pace than many had expected. In spite of global inflation, economic uncertainty, we dropped below those of many Euro area member states.
All this is very positive, but it cannot be a reason to become complacent, nor should we be unaware of the continued challenges. The levels of per capita GDP, investment, unemployment, productivity, continue to be below the OECD and EU average.
Furthermore, although the process of disinflation continues, as in many OECD states, this last mile of the journey back to the 2% inflation target is harder than the previous stages. Price levels continue to be elevated. Therefore, despite rising nominal and real wages, citizens continue to feel pressure on their purchasing power. We fully acknowledge this is a significant problem, not just for Greece, but I imagine for most OECD countries. But going forward, I do expect this problem to be moderated.
The recent inflationary episode is drawing towards a close, but real wage growth accelerates. This is an expectation which is also shared by the survey. Going forward, we agree with the survey’s view that a key imperative for Greece will be to maintain our high growth rates by strengthening, in particular, productivity, investment, and employment.
This also, of course, means maintaining the public debt stays on a firmly declining path, but also increasing the fiscal space for investment in line with the conclusions of the survey. We will pursue this objective through maintaining the appropriate primary surpluses, but we will also focus on growth-enhancing reforms and the continued reduction of tax evasion.
In this area, dear Mathias, there has been significant progress. I’m glad that this is acknowledged in the survey. We have also added an additional package of measures which we legislated in 2024, 11 measures aiming to reduce tax evasion. I do expect that when the next year’s survey is going to come out, we will see a significant improvement in our performance in this area.
I do believe that the measures that we have taken probably have also exceeded our own expectations, bringing in extra revenue, which already, for example, has been used this year to finance public investments, health expenditure, education, but also measures aiming to tackle the significant demographic challenges that our country is facing, very similar to that of many other OECD countries. This is a challenge that requires long-term policies.
Here, let me point out that Greece is also one of those OECD countries that is investing significantly above the OECD average when it comes to defence. Europe is faced with a drastically different situation, big geopolitical challenges. We’re all obliged to step up our military expenditure.
This will, of course, add more pressure on our public finances. And that is why, within the European Union, I have been arguing in favour of treating defence spending as a common European public good. It’s important that EU member states coordinate their policies, from joint procurement to joint production, but to also possibly the joint financing of military investment.
The same proposal, of course, could also apply to investments related to green transition. Greece has made significant progress in this area. We produce more than 50% of our electricity from wind and solar. The green transition, of course, is a top European priority, but it needs to happen in a way so that it does not undermine European competitiveness, especially the competitiveness of European industry.
But it is also the example of a European common good which requires very big investments, but also policy coordination and common investments that will benefit the European continent as a whole. The Draghi report, for example, highlights the need to focus on pan-European energy interconnections and building an integrated European energy market should be probably one of the top priorities for the next Commission, but also for the European Council.
On a related subject, I’m very much in agreement with the survey’s analysis on climate-related risks. Following last year’s disastrous floods in Thessaly, we have introduced a policy comprising of additional adaptation spending -by the way, that’s another European common good-, building and ring-fencing fiscal buffers to cover costs when risks materialise, but also introducing mandatory private insurance so as to set a limit to the fiscal exposure to natural disasters. And in the 2025 budget, we actually expand these measures.
I found the survey’s thematic chapter on boosting firm growth and innovation to be of particular interest. We recognise that innovation and productivity growth are critical challenges for Greece, and they are key for ensuring long term growth, particularly under the present demographic challenges.
And we share the survey’s view regarding the importance of the regulatory framework, competition in goods and services markets as drivers of higher investment and productivity. Indeed, thank you for acknowledging that Greece has improved substantially its business environment, as depicted by the strong improvement in the OECD product market regulation index and other similar rankings. We will continue along the same path.
Regarding skills, and this is an area of great priority also to me personally, we have invested significant amount of funds, many of them actually financed by the RRF, a training of 300,000 people in green and digital skills. But at the same time, we acknowledge that we need to do much more, and we need to work with the social partners in this area in terms of making sure that the skills, training, upskilling and reskilling that we offer is not just a bureaucratic process that helps us to absorb European funds, but really leverages the need to make sure that we bridge the mismatches which currently exist in our labour market.
I would like to end my remarks by making a special reference to artificial intelligence, a subject which is at the cutting edge of the global debate on productivity. A major national objective for Greece is to catalyse this global technological revolution in artificial intelligence for the benefit of the country and its people. We recognise that we are a relative latecomer to artificial intelligence, but this may also offer us an opportunity to leapfrog to the next generation of AI development, exploiting possible competitive advantages.
We come to this challenge with great ambition. Just a week ago, the High-Level Advisory Committee on Artificial Intelligence presented a very ambitious document. This is our blueprint for Greece’s AI transformation. This is essentially our national AI strategy. It sets out our principles, it identifies a dozen flagship projects which offer large transformational potential for Greece in the AI space.
We want to be protagonists in creating a forward-looking, adaptable, transparent regulatory framework, within the relatively broad parameters of the AI Act, that embraces innovation, that supports the booming ecosystem of technology startups that already exist in Greece, but that also offers valuable tools for improving productivity of the public service. Of course, the stimulation of economic activity around sectors where Greece is in a unique position or in high need of innovation. Culture, shipping, health, tourism, sustainable agriculture, energy, climate mitigation, adaptation, all these are areas which could greatly benefit from the AI revolution.
Of course, we also remain active on AI within the OECD. In October, Greece co-chaired with Canada, the global OECD strategy group, bringing together 50 countries, including members of the global partnership on AI, to jointly explore the critical topic of the future of AI governance and to create coordinated approaches.
And with this remark, dear Mathias, let me thank you once again for presenting this very valuable survey. The next survey in 2026, I’m confident, will have more positive content reflecting the improved living standards for the citizens of Greece, whose welfare is a top priority of my government.
Let me end by offering a more political observation. All these reforms, in order to be implemented, require a conducive political environment. Greece is now a country which has a stable government with an absolute majority in parliament. At a time when the politics of many European countries are becoming that much more complicated, this is the most important necessary precondition to implement an ambitious reform programme. We are in the fortunate position to meet this precondition. We certainly intend to honour the trust which was offered to us very generously by the Greek people in the recent election and to make sure that we move forward with ambitious reforms.
These reforms sometimes are faced with political objections. They ruffle the feathers of special interests. This is quite natural when we talk about ambitious reforms. But our commitment to our reform agenda remains unwavering, and it is very much in line with the suggestions of the OECD economic survey for Greece. So thank you again very much for being here.
