Over a year after a fiscal crisis and the beginning of IMF/EU/ECB support, Greece is still in a serious recession. The sizeable, but vital, fiscal retrenchment, has significantly reduced its large budget deficit. Considerable advances have also been made with structural reforms both in the public sector and in labour and product markets. Despite this progress, persistent market scepticism concerning the capacity of the country to restore sustainable public finances and to renew economic growth has left sovereign interest spreads at record highs. Against this background, this Survey offers an assessment of the Greek economic situation, its outlook, and the progress achieved with reforms. To understand the source of the problems, this chapter examines the causes and the scope of the macroeconomic imbalances that Greece must correct, including developments after the introduction of the adjustment programme. It then assesses the strategy underlying the economic adjustment plan and discusses the risks associated with the reform process.