Greece completes one of its most difficult economic chapters

Greece has concluded one of its most severe economic chapters, marking a symbolic end to a period that defined an entire generation of Greeks. The European Commission recently removed Greece from the list of EU members with serious macroeconomic imbalances, a move Athens interprets as the culmination of years of struggle following near-bankruptcy and a crisis that rattled the entire eurozone. Despite still bearing the scars of a prolonged crisis, Greece's economic indicators show a noticeable turnaround, including budget surpluses, reduced public debt, and unemployment levels at their lowest since the start of the crisis. International financial institutions have hailed this recovery as one of the most remarkable economic stories of the last decade. The journey from euphoria over the introduction of the euro to the brink of bankruptcy began in 2001 when Greece adopted the currency. Membership in the euro area allowed the country to borrow more cheaply, as interest rates dropped from around 20 percent to approximately five percent. However, lower borrowing costs were not accompanied by necessary structural reforms. According to Rune Thyge Jensen, a macroeconomic analyst at Denmark’s Danske Bank, one of the biggest mistakes was the belief that the rules of the euro zone and financial markets would automatically force countries into responsible fiscal management. Instead of curbing spending, Greece continued financing its large public sector with increasingly cheaper debt. Conditions appeared stable until the global financial crisis of 2008. The revelation of a significant deficit triggered the European debt crisis. When the world fell into the financial crisis, borrowing costs quickly rose. Soon after, the Greek government admitted that the actual fiscal deficit for 2009 amounted to approximately 15 percent of GDP, far exceeding previous estimates. This led to a loss of confidence among financial markets. Credit rating agencies repeatedly downgraded Greece to nearly non-investment grade, and the country lost access to normal financing on international markets. The crisis did not stop at Greece's borders. Investors began doubting the ability of other southern European countries, Spain, Italy, Portugal, and Ireland, to repay their debts. The debt crisis thus grew into one of the greatest tests of the survival of the euro area. Rescue through international aid came in 2010 with the first major package of assistance totaling 110 billion euros, prepared by the European Commission, the European Central Bank, and the International Monetary Fund. Additional support programs followed, and the total value of financial assistance exceeded 280 billion euros in subsequent years. This aid was conditional. The country had to implement extensive austerity measures, reduce public spending, reform the pension system, improve tax collection, and make numerous changes in labor markets and public administration. These measures were politically extremely demanding and caused mass protests and a noticeable decline in living standards for the population. Nevertheless, they gradually improved public finances. Fiscal indicators show a noticeable turnaround. According to data from the European Commission, Greece achieved a budget surplus of 1.7 percent of GDP in 2025. Subtracting interest expenses for servicing debt, the primary surplus reached 4.9 percent of GDP. This positions Greece among the few eurozone members with a positive fiscal balance, while the average deficit of eurozone countries amounted to approximately 2.9 percent of GDP. The European Commission expects Greece to maintain these surpluses in 2026 and 2027, indicating a continuation of gradual debt reduction. Public debt remains high, but it is declining rapidly. The largest challenge for Greece is public debt, which reached a record 209 percent of GDP during the pandemic in 2020. Since then, the ratio of debt to economic activity has steadily decreased. In 2025, it stood at approximately 146 percent of GDP, and the European Commission forecasts further reduction to around 134.