Greece’s economic revival a blueprint for Europe
It is hard to overstate how far Greece has come. Less than a decade ago, the country was teetering on the brink of default, with its economy having lost a quarter of its output, a soaring debt burden, and global investors deeming its markets uninvestable. In 2012, the country implemented the largest debt restructuring in history. In 2015, it introduced capital controls.
Today, Greece is one of Europe’s outperformers, demonstrating that even the most severe economic crises can be overcome with the right measures.
To put it simply: Greece is back in the game.
Bloomberg has been present in Greece for more than 30 years, and during this time we have observed the ebbs and flows of its economic journey. Recently, I had the opportunity to host a gathering in Athens with Prime Minister Kyriakos Mitsotakis, alongside over 30 senior international and domestic investors, chief executives and business leaders from various sectors. The sentiment at this event was overwhelmingly positive, a stark contrast to the doom and gloom of a decade ago.
When I first met with Mitsotakis back in 2016, he was leader of the opposition. At that time, Greece was still teetering on the edge of default. The economy had contracted by a quarter during a protracted crisis, the debt burden had skyrocketed to unsustainable levels, and global investors deemed its markets uninvestable. Fast-forward nearly a decade, and the feedback from international investors at our recent event highlighted a dramatic shift. Companies, both large and small, are now deploying capital in Greece, and confidence has returned in full force.
This turnaround is no accident. Greece is now one of Europe’s top performers, having regained its investment grade rating. The debt-to-GDP ratio is back to manageable levels, the economy generates a sustainable primary surplus, and it is growing faster than the European average. Bond yields are at record lows, and the Athens Stock Exchange (ATHEX) has outperformed most EU exchanges. In 2023, Greek equities not only ranked first in terms of real return but did so by a significant margin, with a return of 43.8% compared to 24.4% in Poland.
These achievements are not merely abstract figures. They are reflected in the everyday experiences of Greek citizens. During my recent visit, I had a conversation with a taxi driver who echoed this sentiment of optimism. He said that business was improving, and his children were now able to find work.
The international investment community has taken notice of this. At the gathering in Athens, business leaders from various sectors expressed their confidence in Greece’s economic trajectory.
Financial sector resurgence
Greece’s banking sector, once a symbol of the country’s financial troubles, has made a significant comeback. The European Central Bank’s recent approval for Greek banks to pay dividends for the first time since 2008 is a clear signal of this recovery. Major banks like Eurobank Ergasias Services and Holdings and National Bank of Greece are set to distribute substantial dividends, marking their return to normalcy and reinforcing investor confidence.
Companies, both large and small, are now deploying capital in Greece, and confidence has returned in full force
Furthermore, Greece’s decision to repay €8 billion in bailout loans ahead of schedule underscores its fiscal strength and commitment to economic stability. This move, covering loan amortizations from 2026 to 2028, sends a powerful message to financial markets. Despite a slight reduction in its growth target for 2024 to 2.5%, Greece continues to perform well above the European Union average.
The current administration has focused on structural reforms, fiscal discipline, and fostering a business-friendly environment. These efforts have not only stabilized the economy but have also laid the groundwork for sustained growth. The government’s aim to achieve a primary surplus of 2.1% of GDP this year and in 2025 reflects its commitment to sound fiscal management.
One of the most remarkable aspects of Greece’s recovery is its exclusion from the European Commission’s Excessive Deficit Procedure, which countries like France and Italy are subject to for keeping deficits over 3%. Greece, once the epicenter of the eurozone debt crisis, is now being spared this scrutiny.
Privatization initiatives have also gained momentum, with the state divesting its holdings in major lenders and preparing to sell its remaining stake in National Bank of Greece. The successful listing of a minority stake in Athens International Airport and other privatization efforts are further signs of Greece’s positive trajectory.
A broader European context
The broader European context adds another layer to Greece’s success story. Countries like Spain and Portugal, which also faced severe economic crises, have emerged as some of the eurozone’s fastest-growing economies. They are growing at rates twice the eurozone average, driven by tourism, post-pandemic recovery, and structural reforms.
However, Greece’s scars of the economic slump remain, particularly in the labor market, and the task of rebuilding reputations continues. The crisis period ingrained a view that Southern Europe is irresponsible and unproductive, a perspective that has fueled a geographic divide within the continent. Changing this narrative requires ongoing effort and tangible results.
Despite these successes, challenges remain. Falling birthrates and labor shortages threaten the long-term outlook, as they do in most of Europe. The spread of climate-related disasters like wildfires and floods have strained government finances.
Greece’s journey from economic despair to recovery highlights the importance of financial stability, market confidence, and structural reforms. The absence of uncertainty, once a significant deterrent to capital and labor, is now one of Greece’s greatest assets. As Europe faces geopolitical shifts and economic uncertainties, Greece’s comeback story serves as a powerful example of how strategic reforms and investor confidence can turn around a nation’s fortunes.
Constantin Cotzias is European director at Bloomberg LP.
