External Sector Dynamics and Firms’ Competitiveness in Greece

Greece’s external sector has undergone significant transformation over the past decades. Pre-crisis imbalances—including large fiscal deficits, household overinvestment, and elevated labor costs—have largely been corrected. Nevertheless, the current account deficit remains sizable, reflecting persistent challenges such as subdued private saving, low value added in exporting sectors, and high external debt. Advancing supply-side reforms would help strengthen international competitiveness and raise productivity, supporting higher domestic value-added and saving. Maintaining prudent fiscal policy remains essential to further reduce external debt.