Greece’s new draft budget for 2026 paints a strikingly optimistic picture, placing heavy emphasis on investment as the engine of growth. The government projects a 10.2% surge in investments, double the pace expected in 2025, with the aim of narrowing the gap between Greece and the rest of the eurozone. Based on these forecasts, the budget sets a growth target of 2.4% of GDP.
According to the draft budget, investments alone are expected to contribute 1.7 percentage points to growth, while private consumption is seen rising by just 1.7% and employment edging up by a modest 0.4%. The aspirations of this budget are lofty and also raise serious questions about but also raises questions about whether reality can keep pace with projections.
Much of the anticipated investment momentum rests on funds from the European Union’s Recovery and Resilience Facility. Since 2021, Greece has received about €21.3 billion, including €9.9 billion in grants. For 2026, a further €7.2 billion is expected. Yet the deadlines are unforgiving: all projects and reforms must be completed by August 2026, with the last disbursements arriving by December. The European Commission has already warned that no extensions will be granted, placing major infrastructure projects at risk if timelines slip.
Brussels has also issued pointed warnings about various different projects. Railway and social housing projects have been deemed unrealistic within the set timeframe, while health sector reforms have been singled out for slow progress. If schedules are not met, the flow of EU funds could stall, weakening investment’s contribution to GDP and undermining the government’s growth targets.
Adding to concerns is a slowdown in the real estate sector. The Bank of Greece recorded a 17.8% drop in foreign direct investment in property during the first half of 2025, the first significant decline after five years of steady growth. Stricter rules for “golden visa” permits, high construction costs, building code changes and bureaucratic hurdles have further dampened momentum in an industry long seen as a pillar of Greece’s recovery.
The budget also assumes inflation will ease to 2.2% in 2026, a forecast that many observers consider overly hopeful. Both the European Central Bank and the Bank of Greece have cautioned that service prices remain stubbornly high, with Greek inflation potentially outpacing the eurozone average. If inflation proves stickier than expected, household incomes could come under pressure, eroding the very investment performance the government is banking on.
International organizations already appear more cautious. The Bank of Greece projects 2.0% growth in 2026, while the country’s Fiscal Council places it at 2.3%. The European Commission and IMF warn of a global economic slowdown, a factor that could easily spill over into the Greek economy.
Ultimately, the government is pinning its hopes on investments to carry the weight of growth, supported by income increases, tax relief, and public spending. But the risks are considerable: missed deadlines could jeopardize billions in EU funding, the property market is showing signs of fatigue, and inflation remains unpredictable. If the gamble pays off, Greece could make major strides toward closing its investment gap. If not, the cost may be felt not only in lost funding, but also in unmet growth targets.
