Greece’s Road to Recovery: Investment Alone Won’t Rebuild a Fragile Economy

The report outlines two projections for how long it might take Greece to return to its pre-crisis capital stock levels

Fifteen years after the outbreak of its debt crisis, Greece is still working to rebuild the foundation of its economy. At the heart of this effort lies the recovery of its capital stock — the total value of infrastructure, machinery, buildings, and productive assets that fuel economic growth. While investments have picked up in recent years, they remain below pre-crisis levels, and experts caution that growth will not be sustainable without deeper institutional and structural reforms.

A recent report from the State Budget Office of the Greek Parliament estimates the country’s capital stock in 2024 at €657.2 billion. This figure is still €68.5 billion, or 9.4%, below its 2010 peak, when Greece entered the first of several bailout programs amid a spiraling debt crisis. That gap reflects more than a financial shortfall; it underscores how fragile the foundation of the Greek economy remains.

Capital stock is often seen as the "body" of an economy — its physical strength. But an economy also needs a "mind" in the form of stable institutions, effective governance, and clear rules, as well as a "heart," meaning a productive culture, public trust, and a shared sense of direction. In 2010, Greece appeared physically strong in economic terms, but internally, the system was fragile. When the global financial crisis hit, the country’s economic structure quickly buckled.

The report outlines two projections for how long it might take Greece to return to its pre-crisis capital stock levels. In an optimistic scenario where investments grow at an average annual rate of 6.6% — similar to the pace seen between 2017 and 2024 — the country could close the gap by 2030. In a more conservative projection, assuming annual investment growth slows to 4% and excludes continued EU recovery funding, the full recovery would be delayed until 2036.

Yet reaching the 2010 level of capital stock is not the same as ensuring long-term prosperity. According to the Budget Office, investment must not only cover the wear and tear of existing assets but also exceed it, generating new productive capacity. This goal hinges on the state’s ability to effectively absorb European funds, maintain policy stability, and foster an investment-friendly climate.

In reality, the size of Greece’s capital stock in 2010 concealed a host of vulnerabilities that contributed to the crisis. Productivity was low, and many businesses were not internationally competitive. Investment, even when abundant, often failed to produce meaningful returns because it wasn’t tied to innovation or export-driven growth. Public and private funds were frequently mismanaged. Large-scale projects, many funded by EU subsidies or cheap credit, lacked strategic vision. Cost overruns and political favoritism were common.

Debt levels were another major burden. Both public and private debt had become unmanageable by the time the global downturn arrived, leaving Greece with no financial cushion to support its economy. At the same time, critical structural reforms were either delayed or never implemented. Rigid labor laws, inefficiencies in the judicial system, red tape in public administration, and a difficult licensing environment all discouraged productive investment.

Even within the capital stock itself, a significant portion was essentially inactive. Empty factories, idle infrastructure, and underused real estate still counted toward the capital total, even though they made little or no contribution to economic output.

Today, many of these problems persist. While Greece has exited its bailout programs and returned to growth, the foundations of its economy and its institutions remain vulnerable.