Greece is experiencing a remarkable economic resurgence, with Forbes magazine characterizing its stock market as "the world's hottest stock market in 2025." To further bolster this momentum, the Greek government is preparing to announce an economic stimulus package worth €1.5 billion, to be unveiled by Prime Minister Kyriakos Mitsotakis at the Thessaloniki International Fair (TIF) in September 2025. This package will focus on supporting the middle class, families, and pensioners through targeted measures.

This announcement comes against a backdrop of strong positive economic indicators in Greece, including the MSCI Greece Index's surge of over 70% in 2025, significantly outperforming broader European indices. This rally is largely driven by the banking sector, which constitutes a substantial portion of the Global X Greece ETF (GREK). The robust performance suggests a broad-based economic improvement, with potential spillover effects across various sectors.

The proposed package includes measures such as reforms to income tax scales, particularly focusing on reducing the tax burden for the second income bracket (€10,000-€20,000). A reduction in rental income tax rates is also planned, with initial proposals suggesting a drop from 15% to 7.5% or even 5% for incomes up to €12,000. The expansion of the 30% tax deduction scheme for declared expenses in various services to encourage electronic transactions and combat tax evasion is also anticipated. These measures align with the broader "Greece 2.0" plan, which leverages EU Recovery and Resilience Funds to boost infrastructure and digitalization.

Market Signals

Sector Impacts and Opportunities: The banking sector is the primary beneficiary of this recovery, with potential growth in technology, green energy, and real estate sectors.
Price Movements and Volatility: The Greek stock market has shown strong performance, indicating investor confidence, and this momentum is expected to continue.
Competitor Positioning Changes: Greece is seeking to enhance its investment attractiveness through reforms, which could influence regional competition.

Winners & Losers

The middle class, families, and pensioners are expected to directly benefit from tax breaks and income increases. Investors will also find opportunities in equities, startups, and green energy. However, companies might face challenges in implementing new tax laws, while tax evasion and labor market inefficiencies remain existing hurdles.

Action Timeline

Immediate (24-48h): Monitor announcements at the Thessaloniki International Fair (TIF) for precise package details.
Short-term (1-2 weeks): Assess how to capitalize on new tax incentives and their expansion.
Long-term: Leverage the "Greece 2.0" plan and increase investments in technology and green energy.

Risk Assessment

Regulatory Risks: Changes in tax laws could introduce complexities for businesses.
Market Volatility: Despite strong performance, the Greek market could be affected by global market downturns.
Geopolitical Tensions: Global uncertainties may impact investment flows.
Implementation Challenges: The package's success hinges on the effective and timely implementation of announced measures.
Fiscal Sustainability: Maintaining fiscal discipline amidst increased spending is crucial.

Key Indicators

Signals for Market/Industry: Greece's economic recovery reflects the strength of reforms and growing investor confidence.
Leading Indicators and Data Points: GDP growth, unemployment reduction, stock market performance, and FDI inflows.

Regional Perspective

Greece is demonstrating a notable economic recovery, with a focus on supporting the middle class and vulnerable populations. The Greek strategy could serve as a model for other countries in the region seeking to enhance economic stability.

Immediate Implications

What Happens Next: Stimulus package details will be revealed at the Thessaloniki International Fair, offering immediate opportunities for businesses and individuals.
Time-Sensitive Opportunities or Risks: Early adoption of new tax breaks could provide a competitive edge.

What to Watch

Leading Indicators to Monitor: Stimulus package details, income tax reforms, FDI growth, inflation trends, and EU fund absorption.
Expected Next Developments: Further tax adjustments, sector-specific support, and labor market reforms.
Key Decision Points Ahead: Official announcements at the Thessaloniki International Fair.

Analysis

Greece's economic recovery is a success story of structural reforms, and the Thessaloniki International Fair will further boost this momentum with announcements supporting vulnerable populations. However, maintaining this positive trajectory requires effective implementation and addressing structural challenges.