Energy prices squeeze 2026 growth to 1.8% and push inflation to 3.7%

The European Commission sees Greece’s economic growth falling below 2%, and is expected to reach 1.8% in 2026 and 1.6% in 2027, remaining, however, above the European Union average.

According to the EU Commission’s Spring Forecasts, inflation is expected to reach 3.7% in 2026 and 2.4% in 2027. The main reason for the above estimates are energy prices, which affect real household disposable income and consumption. However, investment growth is anticipated to remain robust, sustained by the ongoing absorption of European funds.

Regarding the estimates for 2027, the Commission attributes the further deceleration of the Greek economy’s growth rate to the gradual winding down of the Recovery and Resilience Facility (RRF). Downside risks to the Greek economy also include the potential for a prolonged energy crisis to adversely impact service exports, particularly tourism.

The sharp increase in energy prices exacerbates inflationary pressures, leading to an estimated rise in inflation to 3.7% in 2026. In 2027, headline inflation is projected to ease to 2.4%; however, core inflation—excluding energy and food—is expected to remain elevated as the energy shock passes through to non-energy goods and services.

Unemployment is expected to continue its decline, albeit at a more moderate pace, reaching 7.9% in 2027. “Greece is expected to maintain a favorable fiscal position, achieving sustained surpluses over the 2025–2027 period, despite expansionary fiscal measures. Strong nominal GDP growth and budgetary surpluses are projected to continue steadily reducing the debt-to-GDP ratio, which is estimated to approach approximately 134% by the end of 2027,” the Commission noted. Investment activity is expected to remain strong in 2026, supported by historically high inflows of European funds to Greece through the Recovery and Resilience Facility (RRF).

The impact of rising energy prices is expected to be partly mitigated by the implementation of measures announced last year and entering into force this year, including reductions in personal income taxation and increases in public sector wages, alongside recent energy-related policy interventions. Nevertheless, private consumption is projected to slow.

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