Greece growth forecast cut to 1.7% as inflation seen rising to 4% in 2026
Economic growth in Greece is expected to slow this year, while inflationary pressures remain elevated, according to new projections by the Hellenic Parliamentary Budget Office.
The report warns that the ongoing energy crisis could weigh heavily on the country’s economic performance, revising growth forecasts downward and highlighting persistent price pressures.
Growth Outlook Revised Downward
The Budget Office slightly lowered its baseline growth forecast for 2026 to around 2%, from a previous estimate of 2.1%, while outlining a range between 1.7% and 2.4% depending on external conditions.
Two key scenarios were modeled:
The projections also factor in a potential 0.25% interest rate hike by the European Central Bank, with a possible second increase expected to be reversed later in the year.
Inflation Pressures Persist
Inflation is forecast to reach up to 4% in 2026, remaining significantly above the Eurozone average.
Recent data from Hellenic Statistical Authority shows inflation stood at 3.1% in February 2026, compared to 1.9% across the Eurozone, raising concerns about Greece’s international competitiveness.
Investments Key to Growth
According to Budget Office head Ioannis Tsoukalas, investment activity will play a decisive role in sustaining growth, particularly through projects linked to the EU Recovery Fund.
However, he warned that implementation of the Public Investment Program must accelerate, noting a €906 million shortfall in execution during the first two months of the year.
Strong Fiscal Performance in 2025
Despite the challenging outlook, Greece recorded a strong fiscal performance in 2025:
- Primary surplus: €12.7 billion (5.1% of GDP)
- Estimated adjusted surplus: ~4.5% of GDP
- GDP growth: 2.1% overall, 2.4% in Q4
Revenue gains were driven largely by:
- Increased income tax receipts (+€2.55 billion)
- Higher VAT revenues (+€1.43 billion)
- Drivers of Recent Growth
The Greek economy’s positive momentum in 2025 was supported by:
- Private consumption: +2.5%
- Exports: +2.7% overall
- Fixed capital investment: +14%
- This performance outpaced the broader Eurozone, where growth remained modest at 1.4%.
Policy Recommendations
The report stresses the need for enhanced price control mechanisms, particularly through digital monitoring tools that allow businesses to report cost and pricing data in real time across supply chains.
Such measures, it argues, are critical to mitigating the secondary effects of the energy shock and maintaining economic stability.
