Greece’s government expects faster economic growth and easing inflation in 2027, but its forecasts depend on lower international energy prices. The draft budget projects 2.3% growth next year, compared with 2% in 2026. It also forecasts national consumer price inflation of 2.6%, down from 3.8% this year.
Finance Minister Kyriakos Pierrakakis and Deputy Minister Thanos Petralias submitted the draft to Parliament on October 5, 2026. Their plan combines investment growth, income support, tax relief, and further reductions in Greece’s debt burden. However, the document presents forecasts and policy commitments, rather than guaranteed economic outcomes.
The government also faces a transition as projects under the European Union’s Recovery and Resilience Facility reach completion. Maintaining investment momentum beyond that funding cycle represents another test for its growth strategy.
Energy Prices Shape the Inflation Outlook
The draft identifies international energy costs as a major threat to household purchasing power and business activity. Higher fuel and electricity bills squeeze disposable incomes while increasing production costs. Those pressures can weaken consumption and discourage investment, according to the government’s assessment.
The ministers point to geopolitical tensions involving Ukraine and the Middle East, alongside disruptions to maritime trade. Their accompanying letter specifically identifies the Strait of Hormuz among the shipping routes facing uncertainty. They also flag international trade restrictions and growing fiscal risks across European economies.
The budget includes €200 million($223.73 million) for potential needs arising from the energy crisis. Petralias said this provision could support energy costs during the opening months of 2027. The allocation provides contingency funding, rather than a guarantee that energy prices will decline.
The draft uses two inflation measures, which produce different forecasts. The national consumer price index points to 2.6% inflation in 2027. The harmonized index, which supports European comparisons, indicates 2.4%, compared with 3.6% in 2026. Both forecasts assume that international energy prices gradually ease.
Investment Leads the Growth Plan
The government expects investment to increase 7.9% in 2027, following estimated growth of 7.7% this year. Construction and equipment purchases would provide much of that momentum. Fixed investment would contribute approximately 1.5 percentage points to real economic growth under the draft’s assumptions.
Investment would also represent a larger share of the economy. The draft projects an increase from 17.8% of GDP in 2026 to 18.6% next year. Meanwhile, nominal GDP would rise from approximately €262 billion to €274.6 billion($293.14 billion to $307.23 billion).
The government expects private consumption to grow 1.5%, slightly faster than this year’s estimated 1.4%. Public consumption would increase 1.4%, compared with 1.1% in 2026. Exports would grow 3.1%, while imports would increase 4% as investment supports demand for foreign goods. The draft also anticipates a 5.9% rise in travel receipts.
The Hellenic Fiscal Council accepts the government’s macroeconomic forecasts but maintains a more cautious growth estimate for Greece while its own forecast puts 2027 growth at 1.9%, below the government’s 2.3%. The council also warns that the investment target exceeds comparable estimates from international organizations.
Lower Unemployment and Higher Wage Targets
The draft forecasts unemployment of 7.9% in 2027, down from 8.4% this year, using the Labor Force Survey measure. The ministry describes that projected rate as Greece’s lowest since 2008. It also expects nominal compensation per employee to increase 3.9%, compared with 3.7% in 2026.
The government targets a monthly minimum wage of €960($1,073) in April 2027, up from €920($1,029). A further increase would bring the minimum to €1,000 in January 2028. These figures represent government targets, not wages that workers already receive.
The plan also proposes reducing private-sector employees’ social insurance contributions by 0.5 percentage points from April. Public-sector pay would increase alongside the minimum wage adjustment. Separately, the draft provides for a €500($559.25) gross Christmas payment for public employees and officials from December 2027.
The package includes targeted changes for households, farmers, and small businesses. The government proposes a zero tax rate on income up to €20,000($22,372.80) for professional farmers and parents with three children. It also plans relief from certain presumptive-income adjustments for qualifying self-employed taxpayers.
Tax Relief, Benefits, and Housing Support
Another proposal would lower sole proprietors’ advance income tax payment from 55% to 50% for the 2027 tax year. The draft places the resulting fiscal impact in 2028. That distinction matters because the tax year and the budgetary cost do not always coincide.
The government plans to raise November’s annual support payment to €400($447.46) net from 2026. It would extend eligibility to all pensioners older than 65. The package also proposes linking disability benefits to inflation and introducing a €2 billion “My Home III” housing program.
A proposed children’s investment account would match parents’ annual deposits with state contributions, capped at €1,200($1,342.42) yearly. Small and medium-sized businesses would gain a new €1.5 billion($1.68 billion) lending and guarantee program. However, the package includes measures that still require legislation, rather than only benefits that already operate.
Higher Tax Revenue and a Smaller Debt Ratio
The draft projects tax revenue of €77.878($87,118.22) billion in 2027, an increase of €2.149($2.404) billion, or 2.8%. The ministry attributes that growth primarily to the expanding economy. For 2026, it estimates collections of €75.729($84.72) billion, exceeding the original target by €2.085 billion.
State budget spending would decline from €87.971($98.411 billion) billion this year to €85.046($95.143) billion in 2027. The budget draft mainly attributes that reduction to the completion of Recovery and Resilience Facility projects during 2026.
The government targets a general government primary surplus of 3.3% of GDP, compared with 3.6% this year. Its overall surplus forecast, which includes interest costs, falls from 0.6% to 0.3%. Meanwhile, the debt ratio would decline from 136.7% of GDP to 128.8%.
The draft also projects a reduction in the debt stock itself. General government debt would fall from €358.1($400.60) billion in 2026 to €353.69($395.66) billion in 2027. Those remain budget projections, alongside the government’s assumptions about growth, revenue, and spending.
The next formal milestone comes on November 20, when the government plans to submit its final budget proposal. Petralias outlined that timetable after presenting the draft to Parliament.
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