BRUSSELS (ANA-MPA/M. Aroni) – A slowdown in Greece’s economic activity from 2.1% in 2025 to 1.8% in 2026 and 1.6% in 2027—due to the “shock” in energy prices—and an increase in inflation to 3.7% in 2026 from 2.9% in 2025, are predicted in the “Spring Economic Forecasts” released on Thursday by the European Commission. Economic growth in Greece in 2026 and 2027 remains above the EU and eurozone average, even though GDP growth in Greece is expected to moderate compared to the Commission’s previous forecasts (growth for 2026 was estimated at 2.2% last autumn, compared to 1.8% today).
In the EU and the eurozone, growth for 2026 is also revised downwards, while inflation is revised upwards. “As a net energy importer, the EU economy is particularly vulnerable to the energy shock caused by the conflict in the Middle East—the second such shock in less than five years,” the Commission pointed out.
For the eurozone, growth is forecast at 0.9% in 2026 and 1.2% in 2027 (down from 1.2% and 1.4% respectively in the autumn of 2025). In the EU, GDP growth is projected to slow to 1.1% in 2026 (down from 1.4% forecast last autumn) and then rise to 1.4% in 2027.
Inflation in Greece is expected to reach 3.7% in 2026 and ease back to 2.4% in 2027. Compared to last autumn’s forecasts, the Commission has revised Greece’s inflation for 2026 upwards by 1.4 percentage points (from 2.3%).
In the eurozone, inflation is projected to reach 3% in 2026 and ease to 2.3% in 2027, while in the EU it is forecast at 3.1% in 2026 and 2.4% in 2027.
EU Commission’s Report on Greece
Economic activity in Greece is expected to slow, from 2.1% in 2025 to 1.8% in 2026, as the energy price shock erodes real household income and restrains consumption growth.
However, investment growth is expected to remain strong, supported by the ongoing absorption of EU funds. In 2027, GDP growth is projected to decline slightly to 1.6% as the implementation of the RRF (Recovery and Resilience Facility) comes to an end.
Inflation is expected to rise to 3.7% in 2026, fueled by the sharp increase in energy prices. In 2027, inflation is forecast to fall to 2.4%, but inflation excluding energy and food is expected to remain high, as the price shock spills over into non-energy items.
Greece is expected to maintain a favorable fiscal position, with sustainable surpluses during the 2025-27 period, despite expansionary fiscal measures. Strong nominal GDP growth and budget surpluses are projected to continue steadily driving down the debt-to-GDP ratio, approaching 134% by the end of 2027.
EU Funds and Fiscal Policy Mitigate Economic Crisis Impacts
In 2025, the Greek economy maintained its growth momentum. GDP grew by 2.1% for the third consecutive year, driven by investment, private consumption, and net exports. Investment activity is expected to remain strong in 2026, supported by the unprecedentedly high inflow of EU funds to Greece under the RRF.
However, the shock to energy prices is expected to reduce households’ real disposable income. The expansionary fiscal package announced in 2025—including personal income tax cuts and public sector wage increases—along with recent energy measures, is expected to somewhat mitigate these effects. Nevertheless, private consumption is projected to slow down.
Import demand is expected to remain strong, driven by the high import dependency of investments. Output growth is projected to decrease further in 2027 as investment slows down due to the completion of the RRF. Overall, GDP growth is projected to moderate to 1.8% in 2026 and 1.6% in 2027, while remaining above the EU average. However, downside risks persist, as a prolonged energy crisis could reduce service exports, particularly tourism.
Higher Inflation Due to High Energy Prices
Inflation remained high in 2025, averaging 2.9%, reflecting strong demand, a tight labor market, and the impact of anti-tax evasion measures. The recent surge in energy prices is expected to increase retail energy prices and, consequently, inflation in 2026, gradually passing through to the prices of non-energy goods and services. In 2027, an assumed correction in energy prices should support the de-escalation of inflation, but the delayed increase in the prices of energy-intensive goods and services will keep inflation elevated. Furthermore, strong demand and wage pressures, fueled by labor shortages, will continue to affect price developments. As a result, inflation is projected to rise to 3.7% in 2026 and reach 2.4% in 2027.
Labor Market Remains Resilient
The labor market continued to expand in 2025, with the unemployment rate falling to 8.4% in the final quarter—the lowest rate recorded since 2008, although still above the EU average of 6%. The long-term unemployment rate remained broadly unchanged, near 5%—the highest in the EU—reflecting long-standing structural challenges, such as the skills gap and insufficient childcare and elderly care solutions. Job vacancy rates continued to decline, though they still indicate a tight labor market, particularly in tourism and construction. Employment growth is expected to continue, but at a more moderate pace, limited by structural bottlenecks and weaker economic activity.