Bank of Greece Economic Bulletin, Issue 63
16/07/2026 - Press Releases
Today, the Bank of Greece published the latest issue of its Economic Bulletin (No. 63/July 2026).
The articles published in the Economic Bulletin reflect the views of the authors and not necessarily those of the Bank of Greece.
Issue 63 features the following five articles:
Maria Flevotomou, Chrysa Leventi and Manos Matsaganis: “Work (dis)incentives for social benefit recipients in Greece”
This article examines whether the strengthening of Greece’s social protection system over the past decade has weakened work incentives for recipients of social benefits. Using the EUROMOD tax-benefit microsimulation model and its Hypothetical Household Tool (HHoT), the authors estimate participation tax rates and marginal effective tax rates for a range of stylised household types, taking into account the interaction between income taxation, social insurance contributions and means-tested social benefits.
The findings suggest that, in some cases, the transition from unemployment or inactivity into employment may be associated with very high effective taxation, particularly when employment results in the loss of unemployment benefits together with reductions in other means-tested transfers. Similar distortions arise when relatively small increases in earnings trigger the abrupt withdrawal of social benefits, substantially reducing the financial gains from additional work or career advancement.
The study stresses that these findings should not be interpreted as an argument for reducing social protection. Rather, they highlight the importance of carefully designing benefit systems so as to balance poverty reduction, work incentives and fiscal sustainability. The authors conclude that a more gradual withdrawal of benefits, better coordination across programmes and wider access to selected social services could reduce work disincentives while preserving the significant social gains achieved in recent years.
Hiona Balfoussia and Anastasios Rizos: “Structural and cyclical factors of the current account balance and the case of Greece”
This article investigates whether recent developments in Greece’s current account balance reflect temporary cyclical factors or more persistent structural determinants. Using panel econometric models for EU countries, the authors distinguish between the long-run structural drivers and the short-run cyclical determinants of current account balances. Then, they apply the estimated cyclical coefficients to the actual change in the Greek current account balance observed in the data during 2023-24, so as to derive its total cyclical component. Subsequently, the structural contribution is derived residually, as the difference between the change in the current account balance and the estimated cyclical component.
The results indicate that the deterioration of Greece’s current account balance in 2024 was mainly driven by cyclical factors, including weaker external demand and higher imports. At the same time, the contribution of structural factors remained positive, reflecting improvements in competitiveness, the investment environment and the broader fundamentals of the Greek economy, supported in part by investment financed through the Recovery and Resilience Facility.
The analysis suggests that maintaining fiscal prudency, accelerating structural reforms and adopting policies aimed at strengthening competitiveness, productivity and export capacity would contribute to improving Greece’s external balance over the medium term while reducing its sensitivity to temporary cyclical fluctuations.
Georgios Gatopoulos, Alexandros Louka, Arsenios-Georgios Prelorentzos, Evangelia Valavanioti and Nikolaos Vettas: “The role of economic uncertainty in the investment and employment gap in the Greek economy”
This article examines how economic uncertainty influences firms’ investment and employment decisions in Greece. Using newly-constructed uncertainty indicators based on Business and Consumer Survey microdata, the study combines macroeconometric and microeconometric approaches to analyse both economy-wide and firm-level effects.
The results show that increases in uncertainty significantly reduce investment and employment, with effects that persist well beyond one year. Moreover, the impact differs across sectors, firm size and business expectations. Smaller firms and firms operating under pessimistic expectations appear particularly vulnerable, while industry and trade exhibit stronger employment effects.
The findings underline the importance of systematically measuring economic uncertainty in order to identify emerging constraints on business activity and to support the design of policies that strengthen economic resilience and mitigate the adverse effects of future periods of uncertainty.
Evangelos Charalambakis: “On inflation perceptions and expectations for Greek and euro area consumers: evidence from the Consumer Expectations Survey”
This article explores how consumers in Greece and the euro area form their perceptions and expectations of inflation using data from the European Central Bank’s Consumer Expectations Survey (CES).
The analysis finds that both perceived inflation and inflation expectations across different forecasting horizons are consistently higher in Greece than in the euro area. Consumers’ inflation expectations are negatively associated with expected economic growth and positively associated with expected unemployment, suggesting that inflation expectations are closely linked to perceptions of supply-side economic developments. The study also shows that inflation perceptions strongly influence inflation expectations, although this relationship weakens over longer forecasting horizons.
Finally, the paper finds significant differences in the way socioeconomic characteristics influence inflation expectations across countries and forecast horizons. These findings contribute to a better understanding of expectations formation and provide useful insights for the design of monetary policy and central bank communication.
Marianthi Anastasatou: “The Cultural and Creative Industries in Greece”
This article examines the economic contribution of Cultural and Creative Industries (CCIs) in Greece. Beyond their cultural and social significance, these industries generate income, employment, trade and innovation, although their contribution to overall economic activity remains relatively modest.
The analysis shows that CCIs account for approximately 1.7% of value added and around 3% of employment in Greece’s business economy. Although the sector is characterised by a highly educated workforce, firms tend to be smaller and less productive than their European counterparts. At the same time, evidence points to increasing internationalisation and growing exports in several creative industries.
The paper highlights important structural challenges, particularly regarding access to finance, given firms’ reliance on intangible assets and uncertain demand. It concludes that improved policy coordination, enhanced financial instruments and adaptation to digitalisation and artificial intelligence are essential to unlocking the sector’s full economic and cultural potential.
Related information:
Issue 63 also includes the abstracts of Working Papers published by the Special Studies Division of the Bank’s Economic Analysis and Research Directorate between January and June 2026.
Related link:
The full text of Issue 63 is available on the Bank of Greece website: Bank of Greece Economic Bulletin, Issue 63.