Greece Faces Slower Growth Amid Rising External Risks

Greece’s system is acceptable for slower maturation successful the years up arsenic outer risks emergence and EU backing begins to taper. Credit: Greek Reporter

Greece is apt to look slower maturation successful the coming years arsenic outer pressures intensify. Geopolitical tensions successful the Middle East are weighing connected user spending, portion fiscal enactment from European Union funds is gradually fading, according to the latest European Economic Outlook by EY (Ernst & Young).

Even so, the Greek system remained resilient successful 2025. Gross home merchandise accrued by 2.5% successful the 4th quarter, bringing full-year maturation to 2.1%. Private consumption, investment, and exports each supported the expansion, signaling a gradual displacement toward a much balanced maturation model. At the aforesaid time, higher employment and rising incomes supported household spending and reflected continued labour marketplace normalization.

Inflation remains supra people arsenic Greece faces slower growth

Inflation remained supra people successful 2025 and was comparatively unchangeable passim the year. It averaged 2.5%, moving wrong a scope of 1.9% to 3.1%.

Services and nutrient drove astir of the terms pressure, portion little vigor costs helped incorporate broader inflation. In February 2026, ostentation roseate to 2.7% twelvemonth implicit year, arsenic higher nutrient and hospitality prices outweighed the dampening effect of cheaper energy.

Investment to anchor maturation successful 2026

Looking ahead, EY expects Greece’s GDP growth to clasp dependable astatine 2.1% successful 2026, keeping the state supra the Eurozone average. Investment is acceptable to stay the main operator of expansion, supported by ongoing projects funded done NextGenerationEU.

However, backstage depletion is expected to soften arsenic the struggle successful the Middle East adds to terms pressures. An investment-led maturation signifier volition apt boost imports, limiting the publication of nett exports adjacent if exports stay stable.

EU money slowdown to trial momentum

From 2027 onward, Greece’s growth is expected to normalize gradually arsenic concern momentum weakens with the completion of NextGenerationEU programs.

Still, the country’s improving fiscal presumption should make country for targeted measures to cushion vigor costs for households and businesses, enactment home demand, and co-finance caller concern projects. As a result, those measures could offset portion of the slowdown successful EU-funded activity.

Greece’s slower maturation trajectory whitethorn see impermanent uptick successful inflation

Inflation is projected to scope astir 3.0% successful 2026, driven mostly by higher vigor prices linked to geopolitical tensions. While halfway ostentation is expected to ease, persistent pressures successful the services assemblage volition apt support it supra 2%.

Beyond that, a pullback successful vigor terms shocks should bring ostentation down to astir 2% successful 2027—though lone briefly. By 2028, ostentation is forecast to emergence again, chiefly owed to accrued vigor costs associated with the rollout of the European Union’s Emissions Trading System 2 (ETS2).