The European Commission is expected to revise down its growth forecast for the Greek economy from 2.4% to 2% when it publishes its spring projections on Thursday, May 21. The revision comes against a backdrop of heightened global uncertainty, with geopolitical tensions in the Middle East adding a new layer of concern to an already complex outlook.
Greece’s economic team is watching the situation closely. The absence of a deal between the United States and Iran has kept regional tensions elevated, and analysts warn that even a near-term de-escalation would not immediately translate into normalized oil flows. Market adjustment, they note, takes time. Upward pressure on energy prices is therefore expected to persist, a particularly sensitive issue for Greece, which remains heavily dependent on oil and natural gas imports. Any escalation feeds rapidly into consumer prices: Greece’s national consumer price index rose 5.4% year-on-year in April, sharply above the 2% recorded in the same comparison a year earlier.
Private consumption and investment to drive growth
For 2026, economic activity is expected to be supported primarily by private consumption, which is projected to rise by 1.7%. Public investment will also play a central role, with total investment spending forecast to exceed 17 billion euros, largely on the back of projects financed through the Recovery and Resilience Facility.
That reliance on EU-funded investment, however, is itself a source of concern. The Recovery and Resilience Facility is due to wind down after 2027, and questions are growing about whether the Greek economy can sustain its current growth trajectory once that funding stream dries up. The Commission’s own projections for 2027 and 2028 point to growth rates marginally below 2%, a signal that without the impetus of European financing, the economy may struggle to maintain stronger momentum.
Beyond 2027, investment is expected to continue through a new generation of European instruments, including the Social Climate Fund, the Modernisation Fund and the Islands Decarbonisation Fund, as well as the 2021-2027 cohesion policy framework, now in its final phase.
Fiscal strength, with caveats
On the fiscal side, Greece has posted strong results. The country recorded primary surpluses of 4.7% of GDP in 2024 and 4.9% in 2025, as confirmed by ELSTAT, the Hellenic Statistical Authority. These gains were driven in large part by increased revenues from a crackdown on tax evasion, which created room for the permanent tax relief measures introduced in 2025 and 2026.
For the 2026 to 2028 period, the Commission expects Greece’s average primary surplus to hold just above 3% of GDP, a level sufficient to keep public debt on a downward path. Greece carries the highest debt-to-GDP ratio in the European Union, and while that ratio has been declining steadily in recent years, the need to maintain consistently high surpluses leaves limited room for more flexible fiscal policy.
A busy week in Brussels
The growth forecasts are not the only Commission assessment Athens is awaiting. As part of the European Semester, the EU’s annual cycle of economic policy coordination, Brussels is also set to publish its review of Greece’s reform progress. The Commission is expected to flag persistent gaps in two areas: the speed of judicial proceedings and the completion of the national land registry, a long-running effort to formally record property ownership across the country. Continued investment in the green and digital transitions, channeled through the new European funding instruments, will also feature prominently.
A separate report on fiscal and macroeconomic imbalances is expected to reiterate concerns about Greece’s low competitiveness, as reflected in its elevated current account deficit. Public debt, despite its downward trajectory, will again be highlighted. The Commission is also expected to call for better matching of workers to available jobs and greater labor market participation among young people and women, areas where Greece continues to lag behind most of its European peers.
Rounding out the package, the Commission will publish its latest post-memorandum surveillance report on the Greek economy. Two issues are expected to remain under scrutiny: the management of non-performing loans, a legacy of the country’s decade-long debt crisis, and delays in the clearance of outstanding state obligations to private businesses and individuals.
Source: ot.gr
