By Lefteris Papadimas
ATHENS (Reuters) -Greece expects its economy to grow faster in 2026, outperforming Europe’s major economies, thanks to higher investment and robust consumer spending, the government’s 2026 draft budget showed on Monday.
The government expects economic output to rise 2.4% next year following expansion of 2.2% this year, partly with the help of European Union recovery funds.
“A key driver of this momentum is the growth rate of investment, which is expected to reach 10.2% in 2026,” Finance Minister Kyriakos Pierrakakis said after submitting the 2026 draft budget to parliament.
The government trimmed its previous estimate for 2025 growth of 2.3% to 2.2% due to a stagnating European economy, a key source of investment and tourism for Greece, and the effects of the Trump administration’s new tariff policy in the United States.
Greece, which has been recovering from a debt crisis during which it nearly dropped out of the euro zone in 2015, projects a primary surplus of 2.8% for 2026, on the back of higher tax revenues and lower unemployment.
The draft budget forecast downside risks from fiscal challenges in major European economies and new tariffs in the United States along with possible geopolitical tension in the wider region.
It includes tax brakes of about 1.7 billion euros ($1.98 billion) to boost households with children and fund pension hikes amid a rising cost of living. This will be funded by higher tax revenues due to increased household incomes, lower unemployment and surpluses.
Greece should achieve a primary surplus of about 2% annually, to be able to cover its interest rate payments and keep its huge debt sustainable.
Its public debt – now the highest in the euro zone – is seen dropping by 7.8 percentage points to 137.6% of GDP in 2026 from 145.3% this year.
“If this happens, Greece will no longer be the most indebted country in the European Union,” Pierrakakis said.
Since emerging from a bailout in 2018, Greece has regained its investment grade ratings in 2023, revived its banking system and relied solely on debt markets for its borrowing needs.
($1=0.8581 euros)
(Reporting by Lefteris Papadimas; Editing by Kirsten Donovan and Gareth Jones)
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