IOBE: economic growth fails to close regional development gaps

A picture of an economy that continues to grow while remaining marked by significant regional disparities emerges from the third report on social and economic trends across Greece’s regions, published by the Foundation for Economic and Industrial Research (IOBE) in collaboration with the Achaia Chamber of Commerce and Industry and the University of Patras.

The report highlights that, despite improvements in key macroeconomic indicators, Greece remains on a path of strong regional concentration, with Attica maintaining its dominant role in wealth creation, investment activity, and overall economic output.

Demographic Pressure and Population Ageing

One of the report’s most concerning findings relates to demographic developments. According to the projections, 12 of Greece’s 13 regions are expected to experience population decline and ageing over the coming decades, with South Aegean being the sole exception.

The shrinking working-age population, combined with a growing elderly population, is expected to place significant pressure on dependency ratios. In regions such as Central Greece, Epirus, and Western Macedonia, the dependency ratio could exceed 80% by 2100 unless effective policy interventions are implemented.

Economic Concentration in Attica

Economic activity remains heavily concentrated in Attica, which continues to generate nearly half of the country’s GDP and more than one-third of total investment.

A substantial gap is also evident in GDP per capita, with Attica and South Aegean remaining the only regions above the national average. At the same time, investment intensity remains below the European average across most parts of the country.

Several island and tourism-oriented regions, along with Central Greece, demonstrated particularly strong momentum, recording the highest growth rates in 2024.

Income and Social Inequalities

The report identifies significant disparities in household disposable income, with major urban centres and several island regions posting stronger performances.

At the same time, social inequalities remain pronounced, reflected in considerable differences in employment opportunities, access to healthcare services, and social protection. Poverty risk continues to vary substantially across regions, while Greece’s social transfer system remains less effective than the European average in mitigating inequality.

Labour Market Disparities

Despite a decline in unemployment across several regions during 2024, the labour market remains fragmented.

High unemployment rates persist in certain areas, while labour force participation remains below the European average in most regions. Self-employment continues to be significantly more prevalent in the regions than in Attica, while a gradual shift towards service-sector employment is also underway.

Healthcare, Education and Social Infrastructure

The report points to significant shortcomings in healthcare and education infrastructure, with unmet medical needs remaining higher than the EU average.

All Greek regions also lag behind in lifelong learning indicators. Furthermore, the report highlights the high proportion of young people who are neither in education, employment nor training (NEETs), particularly in island regions.

Climate Change and Tourism

Climate change is increasingly emerging as a key factor influencing regional development patterns. Between 2012 and 2024, temperatures increased by as much as 1.4°C, with 2024 recorded as the warmest year of the past 75 years.

In tourism, growth continues but at a more moderate pace, while many destinations are experiencing a gradual extension of the tourist season.

The Need for Targeted Convergence Policies

The report concludes that, despite the overall progress of the Greek economy, regional inequalities remain a structural challenge.

Strengthening investment, improving social cohesion, and addressing demographic decline are identified as key priorities for achieving more balanced and sustainable growth across the country.