The high public debt, the significant stock of non-performing loans, the high current account deficit and high unemployment are the main problematic elements of the Greek economy recorded by a Commission report, in the context of the European Semester. The Commission warns that further adjustment and close monitoring are needed, as Greece continues to occupy one of the worst or worst positions in the EU. in the relevant indicators. It is characteristic that the balance of bad loans, which reached 5.9% at the end of 2023, remains higher than the EU community average, where non-performing loans do not exceed 1.8% of the total.
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Regarding debt, he reiterates that the risk is low in the short term, high in the medium term and low in the long term. The balance sheet deficit remains well above its pre-crisis levels, the net investment position is the lowest in the EU, while consumption as a percentage of GDP is the highest in the EU. The EU also raises questions about business investments.
Read the entire report here
Low savings
A factor that keeps business investment at low levels is the low levels of private sector savings. As highlighted, household net savings averaged -2.7% of GDP over the period 2017-2022, well below the average indicators recorded in the euro area (3.6%) and the EU (2.9 %) the same period.
It is emphasized, however, that household and business savings figures may not be accurate, as due to the large number of small businesses, some self-employed may report their personal savings as their business savings. A second reason why the savings picture is unclear is the large size of Greece’s shadow economy
Regarding the current account deficit, the report notes that it increased significantly in the three-year period 2020-2022 and decreased by a third in 2023, mainly due to the favorable developments in imports and exports, but remains significantly higher than pre-crisis levels. To some extent, this is also due to the low level of savings.
Our country’s net investment position also improved in 2023, although it remains the lowest in the European Union. Real consumption slowed last year, although the consumption-to-GDP ratio returned to pre-pandemic levels and remains the highest in the EU. The expected significant increase in investment is likely to keep demand for imports high during the plan period. Recovery and Resilience,
Recovery Fund
“The maintenance of the prudent fiscal policy and the timely implementation of the reforms of the Recovery and Resilience Plan remain critical factors for ensuring the structural restructuring of the Greek economy”, it is also noted in the conclusions of the report.
Maintaining the reform momentum in areas such as the functioning of the public sector, the implementation of justice and bad loans are seen as critical going forward, while securing the target of primary surpluses above 2% is equally critical.
“Furthermore, narrowing the investment gap depends on improving the business climate and access to finance, as well as strengthening the financial sector and capital markets,” the report added.
The investment problem
Also, the report states that Greece is seriously suffering from low productivity and international competitiveness of its economy, mainly due to the large decline in investment during the years of the multi-year economic crisis. In particular, business investments from 34% of GDP in 2008 reached 13.4% of GDP in 2019 and 15% of GDP in 2022, but remaining approximately 10 percentage points lower than the Community average. 
However, according to the report, the possibility of new investments is “held back” by the fact that during the crisis they borrowed too much to survive, currently having one of the highest debt ratios as a percentage of their profits.
The low productive investments in the economy, according to the report, are due to the structure of the Greek market, which is characterized by the prevalence of the low-tech service sector, which is usually labor intensive, which implies lower investment needs.
However, it is noted that the low-interest loans amounting to 17.3 billion euros that Greece has secured from the Recovery and Resilience Fund give breathing space to loans to Greek companies
