The State Budget Office in Parliament (GBOP) has revised its growth forecast for the current year marginally downward to 1.9% from 2% in its previous report, with a forecast range of 1.7% to 2.1%.
As noted in the June quarterly report, presented today by the Office’s head, Ioannis Tsoukalas, disruptions in energy markets—primarily through the Strait of Hormuz—have accelerated inflation and slowed growth at the global and European levels.
Compared to the energy crisis of 2021–2022, the current disruption is considered milder, due to Europe’s reduced dependence on fossil fuels and its spread through internationally tradable goods.
With the situation appearing to ease, forecasts by international organizations (OECD, IMF, European Commission) are converging on a slowdown in growth for 2026 and a partial recovery in 2027, provided that energy markets normalize relatively quickly. Uncertainty remains high, and fiscal interventions are recommended to be targeted and temporary.
It is notably stated: “Although the crisis has entered a recessionary phase, uncertainty remains high regarding international trade, energy markets, economic growth, and inflation. Under these circumstances, the Office is revising its baseline forecast for the growth rate of the Greek economy in 2026 marginally downward to 1.9%, from 2.% in the March 2026 Report, with a forecast range of 1.7% to 2.1%.”
Inflation
Regarding inflation, the report notes that in May 2026 it stood at 4.9%, remaining significantly higher than the eurozone average (3.2%).
The persistence of this divergence remains a cause for concern, as it erodes the Greek economy’s international competitiveness and weighs on the current account balance.
Noteworthy is the downward trend in food inflation in Greece (including tobacco and alcohol) over the past few months (from 4.3% in February 2026), which stood at 2.6% in May 2026, down from 2.4% in May 2025. Food inflation in the Eurozone stood at 1.9% and has remained consistently lower than that in Greece since November of last year.
More generally, regarding the outlook for the Greek economy, the GKEB states that:
- Following the completion of the Recovery and Resilience Facility (RRF), it is critical to make full use of all available European funds and, in addition, to attract alternative sources of financing for investments in cutting-edge technologies.
- According to the Commission, speeding up the administration of justice and strengthening competition in the markets remain major priorities for maintaining growth momentum. Fiscal stability and the predictability of economic policy constitute a competitive advantage for the Greek economy, particularly in an unstable international geo-economic environment, and are a prerequisite for attracting investment.
- Broadening the tax base by strengthening tax compliance remains equally important for creating fiscal space.
- The additional fiscal space should be used prudently and directed, as a priority, toward policies that strengthen the country’s long-term growth potential. Such policies include reducing the cost of labor to strengthen incentives for labor market participation, as well as tax incentives to accelerate the depreciation of investment projects in high-value-added sectors with export potential. Taken together, these measures can help address two key structural weaknesses of the Greek economy: low labor productivity and dependence on low-value-added sectors.
The housing crisis
Regarding the housing problem in Greece, the report includes a special study showing that the issue is not solely a matter of insufficient new construction activity, but also a matter of the utilization, distribution, and functional availability of the existing housing stock.
To this end, the Office highlights the following as critical measures: accelerating the resolution of pending inheritance and land registry issues, providing tax incentives for long-term leases, the targeted regulation of short-term leases in high-demand areas, support for renovations, subject to reintegration into the long-term market, and additional investments, through public-private partnerships, in social and affordable housing.
The Office estimates that:
- During the period 2018–2025, the reduced effective availability of the existing housing stock is linked to an increase in real housing prices of up to 19.1%.
- The vacancy rate will gradually return, over a six-year period, to the lowest levels recorded in 2001.
Such an increase in the real housing supply could exert significant downward pressure on real prices, leading to a decline of approximately 15.5%–24.6%, depending on the specific assumptions of the simulation.