As Greece continues to lose its manufacturing industry, becoming all the more dependent on the service sector, an urgent restart and shift to a complex economy is crucial for the country’s economic viability.

A complex economy is interconnected with other industries that are not necessarily geographically concentrated or thematically related but which share common infrastructure, resources, and solid interdependencies in production and supply chains. The Internet of Things (IoT), automation, and data-sharing are vital for the development and success of a complex economy.

A recent Bank of Greece report states that tourism in 2025 accounted for 13 percent of the country’s GDP. The government presents this as a sign of success, but, behind the numbers, there is a sad ascertainment: Greece is no longer producing goods, and almost everything other than agricultural products is imported. Substantial revenue from tourism is definitely not a bad thing. However, the average Greek does not benefit from tourism revenue. As the cost of living rises, bragging about “soaring tourism revenues” is not filling the citizen’s supermarket cart.

According to Statista and the World Bank, between 2013 and 2023, 68.6 percent of Greece’s GDP came from the service sector, while 15.2 percent of revenue stemmed from industry and 3.3 percent from agriculture. Kostas Axarloglou, the dean and a professor at Alba Graduate Business School, says the Greek industry needs a restart and transition to a complex economy. In other words, Greece needs to enter “Industry 4.0,” or the Fourth Industrial Revolution, in which interconnectedness, automation, and real-time data are key.

Low labor productivity and wages

According to Axarloglou, only four percent of the Greek population is now employed in sectors related to Greece’s complex economy, which amounts to approximately only 11 percent of the value added to the country’s GDP in general. Additionally, in the Eastern Mediterranean nation, there is fragmentation into a large number of small businesses, exhibiting both low labor productivity and wages.

As per The Atlas of Economic Complexity, the industry sector in the Greek economy presents a relatively low degree of complexity in relation to GDP, an element indicative of low potential for economic growth in the future. Nonetheless, from 2018 onwards, The Atlas of Economic Complexity records positive growth in exports with the main contributors, among others, being the pharmaceutical and IT sectors.

A gradual structural transformation of the economy is also being observed, with the transfer of productive resources and activity towards manufacturing sectors with higher added value and productivity, such as electronics and machinery manufacturing. Finally, significant opportunities to strengthen and complement the country’s existing productive fabric have been recorded.

Axarloglou argues that there are both an overall low degree of complexity as well as structural problems in Greek manufacturing. The existence of companies with high levels of specialized know-how, however, provides a sufficient launching point in supporting the restarting of industry and the general production base of the country, which could lead to sustainable development in the Greek economy.

Importance of a complex economy in Greece

Axarloglou referenced the US industry and its contribution to the economy. While the manufacturing industry in the US constitutes 11 percent of GDP, it contributes 35 percent in productivity increase and 60 percent in exports. Furthermore, the complex economy in the United States is the engine of innovation, with related industry sectors producing 55 percent of patents and contributing 70 percent of total expenditure on research and development.

A recent study (Yong, 2020) analyzes the contribution of complexity in a set of economies with varying characteristics. The importance of dynamic industries in economic growth as well as the development of social capabilities and a significant contribution to the achievement of the UN Sustainable Development Goals (SDGs) in each country’s economy were scrutinized.

Overall, the study found there is a direct impact of economic complexity on the development of specific UN Sustainable Development Goals (SDGs), including on poverty reduction, education, job creation, technological economic upgrading, and overall economic development. Moreover, policy interventions for manufacturing expansion are especially vital as they contribute to the development of skills in the country, triggering technological innovation and creating new markets and institutions.

Consequently, the development of a complex economy in Greece could greatly contribute to GDP and the implementation of UN SDGs. It must be mentioned that, in previous decades, manufacturing significantly lagged behind in general, but this lag has eased in recent years.

The two pillars for a complex economy

The development of a sustainable complex economy should be based on two pillars, Axarloglou argues: firstly, extroversion and internationalization and, secondly, innovation and specialization. The Greek industry would profit from participation in International Production Networks (IPNs). This is more feasible now, as these networks evolve from the impact of circular economy, digital transformation, sustainability, and new technologies such as robotics. The mechanisms and structures that would aid in the development of a complex economy are related to the National Recovery and Resilience Plan “Greece 2.0.”

According to Axarloglou, Greece should also orient its manufacturing production towards the international market and within the framework of the Global Value Chain Networks (GVCN), developing even at regional levels. This would include energy networks in the southeastern Mediterranean and innovation pockets in Thessaloniki and Northern Greece. In addition, market megatrends, namely digital technologies, automation-robotics, sustainability and climate change, and a circular economy, should seriously be considered as worthy endeavors.

The adoption of new technologies and digitalization of operations and processes are likewise vital. Such technologies are directly related to the internet, including the IoT, the cloud, and digital platforms and ecosystems. These lead to a greater degree of integration of production, a reduction in transaction costs and easier participation, and more effective coordination of cooperating companies from various geographical locations.

Data collection and analysis (data analytics) help in better production coordination and management within GVCNs and geographically dispersed networks. Moreover, the use of online commercial platforms (e-commerce) results in easy and direct access for producers to raw materials and semi-finished products. Large markets of potential customers are also much more readily accessible.

Sustainable development, climate change, and the circular economy

All the more, a global trend for sustainable development is affecting the structure, organization, and development of GVCNs. There is a growing need to closely monitor and control companies’ social and climate footprints and their alignment with Environment, Social, and Governance (ESG) priorities. At the same time, the imposition of rules on sustainability issues by governments directly affects the structure and operation of GVCNs since these lead to changes in transportation costs and countries’ advantageous dependence on renewable energy availability.

The necessity for sustainability and more efficient management of resources is leading to countries’ adoption of regulations for the operation of the economy and dynamic industries, and businesses are formulating business models and strategies compatible with the imperatives of the circular economy. Technological development now results in technologically and economically feasible production processes that operate within the framework of the circular economy. There is a focus on significant waste reduction, savings, and recycling / reutilization of raw materials and products.

Companies, therefore, develop business models within ecosystems based on collaboration with other companies in order to sustainably produce and deliver value. The purpose of these models and ecosystems is to effectively manage the life cycle of products and spare parts. Of course, the transition from a traditional-linear / operation-production model to a circular one mandates that companies make significant changes in the way they perceive the creation and distribution of value in the economy.

At the same time, the way in which producers in the complex economy model collect revenue is also changing. While, traditionally, income came from product sales, in the circular economy model, profits stem from product rental and other such services. This of course requires new skill development for value production more closely aligned with industrial product usage services, often the result of strategic partnerships among companies.

The circular business model, therefore, has the potential to revitalize manufacturing sectors and businesses by giving them the opportunity to develop new partnerships with companies and ecosystems within the framework of the GVCN, minimizing the burden on the environment, maintaining economic robustness, and achieving the triptych of objectives: an interconnection between the environment, society, and economy, leading to robustness.

European Union funds

The participation of the Greek complex economy in the GVCNs—and mainly in the regional GVCN—requires horizontal interventions that will establish and even improve the required structures and environment, thereby enabling Greek manufacturing to become competitive. Axarloglou argues that Greece has a great opportunity to improve its complex economy with the National Recovery and Resilience Plan “Greece 2.0.” It is a comprehensive plan of reforms and investments for the restructuring of the country’s production model within the extroversion-competitiveness-innovation axis.

The plan is based on initial funding of $35.6 billion (€31.1 billion) for the 2022-2026 period (approximately $21 billion in the form of subsidies and about $14.5 billion in the form of loans), with the prospect of drawing additional investment resources totaling $67.4 billion (€58.8 billion). The plan consists of four Pillars (and 18 sub-axes), namely green transition; digital transition; employment, skills, and social cohesion; and private investment and transformation of the economy.

Green transition emphasizes the energy transformation of the Greek economy towards renewable energy sources and a more energy-efficient operation of the economy, the more efficient use of natural resources, and the promotion of a circular economy.

The digital transition of the economy includes investment in infrastructure (optical fibers, 5G, etc.), the digital transformation of the state, and the promotion and adoption of digital technologies by businesses so that they can be interconnected in the International Production Networks (IPNs).

Employment, skills, and social cohesion includes actions to improve the functioning of the labor market, the reintegration of the unemployed into the labor market, the creation of jobs, and the reduction of inequalities, poverty, and social and economic exclusion.

Finally, private investment and economic transformation includes investments and actions to modernize public administration, strengthen the financial system, promote and support research and innovation, modernize and improve the resilience of key sectors—such as tourism and manufacturing—of the economy, and ultimately improve competitiveness and promote private investment and exports.

“Industry 4.0”

The acceleration of the “Industry 4.0” transformation program includes digital transformation as well as the development of “smart” production and a new generation of industrial parks in Greece. The promotion and support of investments for the development of new or upgraded production lines would enhance production and cooperation in GVCNs and improve competitiveness with an emphasis on advanced and digitally controlled industrial equipment, production control systems, and the establishment of industrial partnerships.

Furthermore, there should be significant structural changes to reduce bureaucracy related to business operations and simplify procedures for attracting and implementing foreign direct investment in the country. This will be possible with the implementation of horizontal actions to strengthen the Greek economy within the framework of the National Recovery and Resilience Plan “Greece 2.0.” Therefore, the “Greece 2.0” and “Industry 4.0” programs are inextricably linked to each other for the development of a productive complex economy in the country.

The EU’s Commission removed Greece from its list of macroeconomic imbalances on Wednesday, marking a turning point in the nation’s post-crisis recovery. The move formally winds down a painful sixteen-year chapter of heightened economic surveillance that led to the era of bailouts.

Among the factors emphasized in the European Commission’s report are: Greece’s resilient growth rate of 2.1% of GDP in 2025 in spite of conditions of global uncertainty, projections for continued strong growth, the continuous high primary surplus, reaching 1.7% of GDP in 2025, and the significant decline in public debt, projected to drop to 123.4% of GDP in 2027, making it one of the fastest rates of debt reduction in Europe. The country’s extensive reforms and speedy progress in the digital transition, especially in tax and public administration, were also taken into consideration.

Prime Minister Kyriakos Mitsotakis welcomed the milestone on social media, writing that the decision effectively “closes a negative chapter that began 16 years ago.” He emphasized that the achievement was not merely a technocratic assessment but rather the “foundation for a better life” made possible by the sustained hard work of Greek citizens and the state.

According to Mitsotakis, the structural budget surpluses achieved through recent reforms can now be directly “channeled into higher wages and pensions,” offering tangible domestic relief to a population that endured years of harsh austerity. “This also marks the official end of all surveillance,” he stressed.

The Commission’s assessment highlights a reduction in risks associated with Greece’s public and external debt, alongside solid economic growth, progress on structural reforms, and a stabilized banking sector.

EU says Greece still lags behind

While the removal from the imbalance list signals Brussels’ confidence in Athens’ current trajectory, the Commission also issued a stark reminder: Greece still lags behind its European Union peers in several key economic areas. The country continues to carry a heavy public debt burden, and average disposable income remains well below Western European standards.

Nevertheless, analysts say that the formal easing of surveillance provides a major psychological and financial boost, potentially lowering market borrowing costs and attracting crucial foreign investment. For a nation that spent over a decade as the epicenter of the Eurozone crisis, the validation from Brussels confirms a hard-fought return to economic normalcy.

Related: Italy Set to Overtake Greece as Eurozone’s Most Indebted Country in 2026

Greece is facing a housing affordability crisis shaped not only by a shortage of available homes but also by deep distortions in the real estate market, according to the IMF’s 2026 “Greece: Selected Issues” report. The IMF’s analysis highlights one of the most significant consequences of Greece’s tourism-driven growth model—the growing tension between the use of properties for tourism and the need for affordable long-term housing for residents.

Asking prices for homes in Greece have risen by about 85 percent since 2017, far outpacing the 47 percent increase in disposable income per person over the same period. The pressure intensified after the pandemic, with home prices rising by 61 percent since the fourth quarter of 2020. Rents, which initially moved more slowly, are now accelerating, with rent inflation reaching 10 percent in 2025.

The IMF describes Greece’s housing crisis as both social and economic. Higher housing costs weaken household consumption, reduce labor mobility, make it harder for young people to leave the family home, and may undermine the country’s ability to attract and retain workers.

IMF says Greece’s housing crisis is about availability, not just supply

One of the IMF’s most notable findings is that Greece has one of the highest housing stocks per capita in Europe. On paper, the country does not appear to lack homes.

The problem is that much of this stock is not available for use as a main residence. Around 35 percent of Greece’s housing stock is not geared toward primary residence usage, and roughly 12 to 13 percent of all homes are vacant. That means Greece’s housing crisis largely reflects an issue of allocation and effective use rather than an actual shortage of homes. Many of these are old, energy inefficient, legally complicated, tied up in co-ownership arrangements, or too costly to renovate.

As a result, the market may appear well supplied at the national level, while, in practice, there are not enough suitable homes in regions where demand is strongest, including Athens, Thessaloniki, major tourist destinations, and areas with concentrated economic activity.

IMF says short-term rentals add pressure

The IMF particularly focused on short-term rentals, which it identifies as a major part of Greece’s new tourism model. Utilizing data from INSETE, the Institute of the Greek Tourism Confederation, the report shows that short-term rental listings increased by 240 percent between 2017 and 2024. They rose from fewer than 100,000 to more than 230,000.

This represents about 3.5 percent of Greece’s total housing stock, 10 percent of non-occupied properties, and 29 percent of vacant homes. The impact, however, is highly concentrated. Short-term rentals are clustered mainly on tourist islands, in central Athens, and in Piraeus, exactly where housing pressure is already intense.

The IMF found that a higher concentration of short-term rentals is associated with rising home sale prices, particularly in areas with lower rates of homeownership. While the impact on rents appears more limited, it is still evident, as short-term rentals reduce the number of properties available to long-term tenants in high-demand markets.

At the same time, the IMF calls for careful evaluation of restrictions. Short-term rentals support tourism, local income, and economic activity, so any policy response must weigh both housing and economic effects.

IMF warns short-term rental curbs are not a cure-all for housing shortages in Greece

The IMF also cautions against assuming that restrictions on short-term rentals would automatically return large numbers of homes to the long-term housing market. Short-term and long-term rental properties are not always interchangeable, and the Fund notes that roughly two-thirds of vacant homes are secondary residences or vacation properties that owners occupy for part of the year.

As a result, stricter limits on short-term rentals may not lead to a significant immediate increase in housing available to long-term tenants. The IMF also warns that geographically targeted restrictions could simply shift demand and price pressures to neighboring areas rather than address broader affordability challenges. For that reason, the it calls for better data collection and careful cost-benefit analysis before such measures are implemented.

IMF links foreign demand to Greece’s housing crisis

International demand has also played a role in driving up property prices in Greece. Following the steep decline in real estate values during the country’s financial crisis, Greek property became increasingly attractive to foreign buyers, including members of the Greek diaspora. Depressed valuations, expectations of future capital gains, tax incentives, and the Golden Visa program all contributed to the influx of investment.

The IMF notes that Greece has since tightened Golden Visa requirements by raising minimum investment thresholds. However, it also points out that successive regulatory changes may have fueled bursts of purchasing activity, as investors rushed to secure eligibility under the previous terms before stricter requirements took effect.

The resulting price pressures have been unevenly distributed across the country. According to market data cited in the report, property values are significantly higher in the Greater Athens area (Attica) as well as in Thessaloniki and major tourist destinations compared to the rest of Greece.

IMF says Greece’s housing crisis affects tourism industry workers

The housing shortage is also increasingly intertwined with the functioning of Greece’s tourism economy. In regions where short-term rentals, elevated property prices, and limited long-term housing supply converge, finding affordable accommodation becomes a challenge not only for local residents but also for the workers on whom the tourism sector depends.

While the IMF does not specifically examine housing for seasonal workers in the tourism industry, its broader analysis points to the same underlying issue. As housing costs rise in high-demand tourist destinations, workers face greater barriers to relocating to areas where jobs are available. Over time, this can reduce labor mobility and undermine productivity, ultimately weighing on the competitiveness of an economy in which tourism remains one of the country’s most vital industries.

IMF finds Greece’s housing crisis is overburdening households

The issue of affordability is already severe for many households. The IMF estimates that in 2025, median housing costs, including mortgage payments, accounted for more than one-third of disposable income. Around two in five households are classified as overburdened, spending more than 40 percent of their disposable income on housing. A further 20 percent spend between 30 and 40 percent, placing them in a vulnerable financial position.

The strain is particularly acute for renters, low-income households, single-parent families, and individuals living alone. Renters in Attica and Central Macedonia, which includes Thessaloniki, face an especially elevated risk of excessive housing costs.

IMF urges Greece to bring empty homes back on the market

The IMF’s primary recommendation is to activate Greece’s large stock of unused housing. This would require a mix of incentives and disincentives, including renovation subsidies, energy-efficiency upgrades, tax incentives for long-term rentals, and policies that raise the cost of leaving homes vacant in high-demand areas.

The Fund broadly supports measures aimed at converting vacant properties or short-term rental units into long-term housing. At the same time, it argues that Greece must reduce the risks faced by landlords who rent to long-term tenants. Proposed measures include improved market transparency, a tenant registry, faster dispute-resolution mechanisms, and rent guarantee schemes for vulnerable households.