Greece’s GDP Is Recovering, But Investment Still Lags – and It’s Holding Back Real Growth

For the first time since the financial crisis erupted in 2009, the country’s gross domestic product is expected to exceed €240 billion in 2025, returning to its pre-crisis nominal size.

After more than a decade of economic hardship, Greece is finally on the cusp of a symbolic recovery. For the first time since the financial crisis erupted in 2009, the country’s gross domestic product is expected to exceed €240 billion in 2025, returning

to its pre-crisis nominal size. This marks a long-awaited moment for the Greek economy, which has remained the only one in the European Union not to surpass its pre-austerity GDP levels. But beneath the headline figures, the picture is more complex — and less encouraging.

The GDP rebound conceals persistent structural weaknesses, the most pressing of which is Greece’s chronic underperformance in investment. Despite substantial inflows from EU structural funds and the EU Recovery and Resilience Facility, as well as a noticeable uptick in construction activity, overall investment remains far below pre-crisis levels. In 2024, investments totaled €36.3 billion — a modest rise from the previous year’s €34.2 billion, but still well short of the €48 billion recorded in 2009, and even further from the €55.6 billion of 2008. Investments now represent just 13.5% of Greece’s GDP, compared to the EU average of 19.5%. Even more troubling, private business investment makes up only 7.7% of GDP — the lowest proportion in the European Union.

The investment that does take place is mostly defensive. Over half of Greek businesses report that their spending is directed toward replacing existing capital, not expanding or innovating. Only 22% say their investments are focused on growth. Even though public investment has grown, reaching 3.9% of GDP and surpassing the EU average, it has not succeeded in unlocking stronger private sector participation. And recent data suggests momentum may be stalling: investment shrank by 3.2% in the first quarter of 2025 compared to the same period last year, casting doubt on the government’s ambitious target of 8.4% growth in investment for the year — a projection many analysts already considered overly optimistic based on past performance.

The European Commission attributes this sluggish investment environment to a host of long-standing obstacles. Greece’s regulatory and institutional framework is widely seen as unstable, with frequent legislative changes generating uncertainty. Bureaucratic inefficiencies, an incomplete and burdensome licensing system, high energy costs, and limited access to finance — especially for small and medium-sized enterprises — further deter both domestic and foreign investors. The tax system remains complicated, and the country’s VAT gap, at 13.7%, is nearly double the EU average, highlighting the persistence of inefficiencies in revenue collection.

Perhaps most damaging is the pervasiveness of corruption and institutional distrust. An astonishing 97% of businesses in Greece believe corruption is widespread, and 70% consider it a serious obstacle to doing business — far higher than the EU averages of 64% and 36%, respectively. Confidence in the rule of law and the public administration is also low. Civil and commercial court cases take an average of 771 days to resolve, while ongoing changes to laws and regulations further undermine predictability and trust.

Even in the area of public works, efficiency remains elusive. More than half of all public tenders attract only one bid, and in 85% of cases, the only selection criterion is price — not quality. The lack of coordination among public agencies slows down the absorption of EU funds, blunting their potential impact.

The European Commission has emphasized the urgent need for Greece to reorient its investments toward more productive sectors — beyond tourism and food services — and to address the structural fragmentation of its business landscape. The predominance of small-scale enterprises continues to hold back productivity, which is now the lowest in the EU, standing at just 56.2% of the European average.

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