Greece’s economy continues to show steady improvement more than a decade after its debt crisis, supported by lower borrowing costs and renewed investor confidence. However, analysts warn that growing integration with global markets is also increasing the country’s exposure to external risks.
Borrowing conditions for Greece have improved significantly in recent years, with easier access to international markets and declining debt ratios strengthening the country’s financial position. According to analysis from the European Stability Mechanism, eurozone bond markets have largely stabilised since 2019, benefiting countries previously affected by market fragmentation.
For Greece, this progress has translated into sharply lower bond spreads. In May 2025, the yield spread on Greek 10-year government bonds over Germany’s benchmark fell below 80 basis points for the first time since 2007, reflecting improved fiscal discipline and stronger economic fundamentals.
Alongside better funding conditions, Greece may soon regain developed-market status in global equity markets. MSCI Inc. has launched a public consultation on reclassifying the Greek stock market from Emerging Markets to Developed Markets.
Such a move would make Greek equities more visible to large institutional investors whose portfolios track MSCI indices, potentially leading to increased capital inflows, improved liquidity, and lower financing costs for companies. A final decision is expected by March 2026, with possible implementation in August 2026.
MSCI has already acknowledged Greece’s progress in economic growth and market accessibility, while reassessing earlier concerns around market size and liquidity.
Despite these gains, analysts caution that greater integration with European markets also brings new vulnerabilities. Greek bond yields are now more closely linked to developments in larger eurozone economies. Fiscal or policy shifts in countries such as Germany can quickly affect Greece’s borrowing costs, even when domestic conditions remain stable.
The ESM warns that trade tensions, fiscal shocks, or broader economic slowdowns in Europe could still cause spreads to widen again.
Economists say Greece’s recovery remains significant but fragile, underscoring the need for continued fiscal discipline, debt reduction, and policies aimed at strengthening long-term economic resilience.
