Subchapters:
- Basic data
- Public finances and the state budget
- Banking system
- Tax system
Basic data
In the years 2010-18, Greece went through a deep first fiscal and then economic crisis, when the volume of GDP fell by a quarter, investments were minimal and unemployment exceeded 20%. The financial markets refused to lend at a reasonable price and Greece was saved from state bankruptcy by massive loans from the European Stabilization Mechanism and the IMF tied to strict conditions of fiscal consolidation, the implementation of fundamental structural reforms and the privatization of state assets. The year 2019 signaled the onset of massive economic growth and the results of the tourism sector were record-breaking. However, the pandemic in 2020 interrupted the promising growth trajectory and significantly affected the Greek economy, which is heavily dependent on services, especially in tourism, which produce a quarter of GDP. The drop in GDP by 9% was the highest in the Eurozone after Spain. In 2021, tourism and the Greek economy were partially revived. In a year-on-year comparison, even with the economically weak year 2020, the increase in GDP by 8.3% was significant. Growth prospects for 2022-23 are positive, but they are threatened by international risks stemming from post-pandemic inflation and the energy crisis exacerbated by the economic impact of the Russian invasion of Ukraine. Check ebizdir for economical facts of Greece.
The Greek government is fulfilling its reform program aimed at improving the business environment and is trying to maintain fiscal discipline with the aim of strengthening investor confidence and achieving the inclusion of government bonds in the investment rating band. European institutions and rating agencies evaluate the government’s economic policy positively, as well as the fact that Greece prematurely repaid the loan from the IMF in the amount of EUR 26 billion at the beginning of April 2022.
An important tool for the economic restart for Greece are funds from the EU Recovery Fund, from which EUR 30.5 billion (17.8 billion in subsidies + 1billion in loans) has been allocated for the years 2021-26. The “Hellas 2.0” plan for their absorption was approved by the European Commission in June 2021. It is divided into four main pillars: (1) green transformation, (2) digitization, (3) promotion of employment, professional specialization and social cohesion and (4) private investment and the transformation of the economy. An advance of 13% of the total budget, i.e. EUR 4 billion, was released in August 2021, followed by the approval of the first tranche of EUR billion in April 2022, and the second tranche of EUR 1.97 billion may be disbursed by the end of the summer.
Greece does not belong to countries with a strong industrial base, the driving force of the economy is services. Industry, energy and construction contribute roughly 19% of GDP, agriculture 4% and services 77%. The most important industries are petrochemical and mining (36%, especially lignite, asbestos, bauxite, magnesite, marble), food (23%), metallurgy (4.5%, especially aluminum plants), chemical (including plastics 8% ) and pharmaceutical (4%). The small volume of industrial production increases the country’s dependence on imports, dominated by fuels and energy products (50%), the share of which will increase in 2021, followed by machinery and means of transport (13%) and industrial goods (12%).
| Pointer | 2019 | 2020 | 2021 | 2022 | 2023 |
| GDP growth (%) | 1.6 | -9.0 | 8.3 | 4.2 | 3.7 |
| GDP/population (USD/PPP) | 32,395.00 | 28,820.00 | 32,280.00 | 35,240.00 | 37,670.0 |
| Inflation (%) | 0.5 | -1.3 | 0.6 | 4.3 | 1.7 |
| Unemployment (%) | 17.3 | 16.4 | 14.8 | 15.3 | 14.7 |
| Export of goods (billion USD) | 37.9 | 35.1 | 54.7 | 61.8 | 68.3 |
| Import of goods (billion USD) | 62.5 | 55.6 | 78.1 | 87.6 | 99.4 |
| Trade Balance (Billion USD) | -25.6 | -21.2 | -24.4 | -26.9 | -32.2 |
| Industrial production (% change) | -0.8 | -2 | 9.3 | 3.9 | 2.8 |
| Population (millions) | 10.5 | 10.4 | 10.4 | 10.3 | 10.3 |
| Competitiveness | 58/63 | 49/63 | 46/64 | ON | ON |
| OECD export risk | ON | ON | ON | ON | ON |
Source: EIU, OECD, IMD, EC
Public finance and state budget
| Public finance up to 44 | 2021 |
| State budget balance (% of GDP) | -7.4 |
| Public debt (% of GDP) | 193.3 |
| Current account balance (billion USD) | -5.9 |
| Taxes | 2022 |
| AFTER | 22% |
| F.O | 9 to 44% |
| VAT | 6, 13 and 24% |
As a result of the extraordinary expenses associated with the solution to the pandemic and the reduction of tax revenues, the state budget was revised in the course of 2021. The government’s economic support measures, aimed at maintaining employment and supporting company liquidity, cost the state treasury a total of EUR 42 billion over the entire period of the pandemic. However, thanks to a more massive increase in GDP (8.3 vs. 6.9%), the final budget deficit was lower than the budget forecast (-7.4 vs. -9.6% of GDP).
The state budget for 2022 was constructed in conditions of pandemic uncertainty, an emerging global energy crisis and rising inflation, but under a realistic assumption for the return of the economy to the pre-pandemic level. The economic impact of the Russian invasion of Ukraine brings new state expenses and forces the government to amend the state budget, the deficit of which will probably be higher than the original assumption (-4.0% of GDP).
Greece’s balance of payments has been passive for a long time. A high trade balance deficit caused by the preponderance of imports over exports is usually partially offset by a significant surplus in services. The balance of payments in 2019, when Greece was visited by a record 33 million foreign tourists, showed a deficit of EUR 2.73 billion. However, in 2020 and 2021, as a result of the pandemic, its deficit increased significantly. In 2021, when the tourist season was truncated, the surplus of the balance of services (13.13 billion) could not offset the deficit of the trade balance (25.62 billion) and the financial account (5.66 billion), and the total PB deficit rose to 10, EUR 61 billion.
Given that Greece is a member of the Eurozone, the amount of foreign exchange reserves, i.e. foreign currency other than the European currency, is low (EUR 12.77 million in 2021).
Note: official data of the Greek CB are published in EUR.
Source of current information: Greek Statistical Office – publication Greek economy in numbers.
Banking system
In connection with the fiscal and debt crisis, the Greek banking system has undergone a number of changes since 2010. In the first phase of the crisis, foreign banks and their branches left Greece and their shares were bought by domestic banks. Capital restrictions in 2015, triggered by fears of a sovereign default and a massive outflow of deposits, were another severe blow to Greek banks. The four systemic banks that survived the crisis underwent a major reorganization and were recapitalized from state and private sources. Smaller representation of foreign banks is starting to reappear on the Greek market. The Greek banking system is consolidated and the banks are under the strict supervision of the European Central Bank. The benefit of the pandemic crisis is a significant improvement in electronic banking services.
- Bank of Greece
- Hellenic Bank Association
Greek banking concerns
- National Bank of Greece
- Alpha Bank
- Eurobank
- Piraeus Bank
Tax system
The basis of the Greek tax system of the country are value added tax (Greek abbreviation FPA), consumption taxes, personal and corporate income taxes and real estate taxes. Several extraordinary taxes and levies were introduced during the economic crisis. The tax burden has become high and the tax system confusing. You cannot do without the help of a tax advisor in Greece. The goal of the current Greek government is to simplify the system and reduce taxes.
VAT rates:
6% – medicines, energy, books, newspapers, tickets to cultural performances,
13% – basic foodstuffs, some necessities for the disabled and children, accommodation services and public catering
24% – other goods and services (basic rate)
The rate is reduced to and 17% on the islands of Leros, Lesbos, Kos, Samos and Chios due to the migration crisis.
Excise taxes on all alcoholic products, spirits, tobacco products and fuels are high and variable. As part of measures to support budget revenues, a luxury consumption tax was introduced in 2010, which applies to ships, cars with a wholesale price above EUR 17,000, private helicopters, precious metals and stones, etc. The specific values must be consulted with the authorities of the Greek Ministry of Finance.
Taxation of legal entities (as, s.r.o., etc.) is 22%.
Taxation of natural persons is progressive. Scale: up to EUR 10,000/year 9%, 10,001-20,000 22%, 20,001-30,000 28%, 30,001-40,000 36%, over 40,000 44%. Employees and pensioners are entitled to a tax-free base of EUR 8,633/year, which increases according to the number of children. The assumption is that they will prove a set amount of electronic payments (in 2021, 30% of actual income before tax). Self-employed persons are not entitled to a tax-free basis.
