Bank of Greece urges additional measures to boost population

The report sounds the alarm on the demographic issue, stressing that it poses a serious medium- to long-term fiscal risk for Greece. Population aging and declining birth rates affect employment, tax revenues, and the sustainability of the pension system, making a coordinated set of policies essential.

According to the report, income tax exemption for young people up to 25 years old earning up to €20,000 encourages their active participation in the labor market, while lower taxes on rental income increase landlords’ disposable income and could boost transparency and declared activity in the real estate market.

Particular importance is also placed on regional measures, expected to strengthen local economies, reduce regional inequalities, and support social cohesion. Overall, the announced measures are projected to have a positive impact on growth and employment in 2026 and 2027.

However, as Governor Yannis Stournaras notes in the report, tax interventions alone are not enough to tackle the demographic challenge. Their effectiveness could be significantly enhanced through complementary policies, such as:

• Investments in quality and affordable childcare facilities
• Institution of flexible working hours and housing support for young families
• Strengthening healthcare services and providing targeted benefits, such as assistance for children’s education or support for new mothers

The Bank of Greece emphasizes that a combination of tax and structural measures can amplify the economy’s multiplier effects while enhancing social cohesion and fiscal resilience.

At the same time, the report stresses that attracting productive investments requires a stable and business-friendly environment — including actions such as digitalization of public services, reduction of bureaucracy, faster judicial procedures, and stronger property rights protection. Additionally, tax incentives for investment in research, development, and manufacturing can reinforce the country’s growth potential.

In conclusion, Greece faces the dual challenge of maintaining social support while ensuring economic growth, as the demographic issue is not only a social concern but also a key factor for long-term economic stability.