The Bank of Greece (BoG) has maintained its 2026 GDP growth forecast at 1.9%, keeping Greece above the eurozone average—but inflation is now the dominant concern. In its updated Monetary Policy Report 2025–2026, the central bank raised its inflation projection for 2026 to 3.8%, up from a previous estimate of 3.1%. This upward revision reflects stronger and more persistent global energy price increases, as well as sustained pricing pressures in services.
Growth Remains Steady, But Gains Are Modest
GDP growth is expected to hold at 1.9% in both 2026 and 2027, with only marginal acceleration to 2.0% projected for 2028. BoG Governor Yannis Stournaras had previously signaled this level of growth in public remarks, and the latest report fully incorporates the economic impact of recent energy market volatility. While Greece continues to outpace the eurozone in growth terms, the central bank notes that global uncertainty, geopolitical tensions, and elevated energy costs are constraining scope for stronger expansion.
Inflation Path Shifts Sharply
For 2027, inflation is expected to ease to 2.6%, followed by a further decline to 2.3% in 2028. However, this softening hinges on two key assumptions: no new spikes in energy markets and no entrenchment of second-round effects—such as wage-driven price pressures across services and final consumer goods.
Investments Remain Key Driver
On the real economy front, investment continues to anchor growth. After an 8.9% surge in 2025, capital spending is projected to rise by 5.5% in 2026—fueled by Recovery Fund disbursements, credit expansion, and foreign direct investment. Growth in investment is expected to moderate in 2027–2028 as the EU’s NextGenerationEU programme nears completion.
Labor Market Strength With Risks
The labor market outlook remains positive: unemployment is forecast to fall from 8.2% in 2026 to 7.8% in 2027 and 7.6% in 2028. Still, the BoG warns of rising wage pressures decoupled from productivity gains—a dynamic that could feed inflation and erode competitiveness.
Fiscal Position Provides Stability
Public finances remain robust. The BoG forecasts a primary surplus of 3.7% of GDP in 2026 and a public debt ratio of 135.7% of GDP. These strong fiscal metrics act as a buffer against external risks, supported by Greece’s sustained primary surpluses and a downward trajectory for debt. A persistent weakness, however, remains the current account deficit—expected to worsen in the coming period.