The high-frequency indicators published so far regarding the course of the Greek economy during the second quarter of 2026 emit mixed messages, notes Eurobank in its analysis.
Overall, the “soft” data indicate that the Greek economy maintained its resilience against the geopolitical and energy shock caused by the war in the Middle East. The “hard” data support a mild slowdown in the annual rate of economic growth compared to the 2.0% recorded in the first quarter.
However, it should be noted that for the “hard” data, figures for June have not yet been published, i.e. for the month during which a de-escalation of geopolitical tensions and a decline in energy prices were recorded.
Already, according to preliminary estimates by the European Statistical Service (Eurostat), annual inflation in Greece fell to 3.9% in June, from 4.9% in May. This development, while positive, should not lead to complacency, as persistent and relatively high inflation has been a main feature of the Greek economy since the war in Ukraine and thereafter.
In the recent Monetary Policy Report 2025–2026, the Bank of Greece (BoG) estimates that the real growth rate of the Greek economy will be 1.9% in 2026 and 2027, while it will accelerate marginally to 2.0% in 2028, from 2.1% in 2025.
For inflation, it forecasts an acceleration to 3.8% in 2026, from 2.9% in 2025, and then a de-escalation to 2.6% and 2.3% in 2027 and 2028 respectively. At the same time, it points out that the recent interim agreement between the United States of America (USA) and Iran, combined with the reduction in international oil prices, increases the likelihood of a slightly more favorable scenario for the growth and inflation of the Greek economy in 2026.
The improvement in international economic conditions is also reflected in the recent statements of President Christine Lagarde, at the annual conference of the European Central Bank (ECB) in Sintra, Portugal. As she pointed out, the upside risks for inflation and the downside risks for growth are now more balanced compared to a few weeks earlier.
The results of the high-frequency indicators of the Greek economy published so far for the period April–June 2026 are summarized as follows:
- Economic Sentiment Indicator (IOBE): Averaged 107.4 points in the second quarter of 2026 (94.0 points in the Eurozone), compared to 106.7 points in the first quarter (see Chart 1.1). Despite the energy disruption caused by the war in the Persian Gulf, confidence indicators in industry, retail trade, and construction improved, while the corresponding indicator in services remained at relatively high levels. In contrast, the consumer confidence indicator declined for the fifth consecutive quarter, to -53.2 points, recording the lowest level of the last 15 quarters. The persistent inflation before the war in the Persian Gulf and its subsequent acceleration explain, to some extent, the continued deterioration in consumer confidence.
- Manufacturing PMI (S&P Global): Averaged 53.2 points in the second quarter of 2026 (51.7 points in the Eurozone), compared to 54.4 points in the first quarter, remaining above the 50-point threshold and indicating continued improvement in operating conditions in manufacturing for the 14th consecutive quarter.
- Employment (ELSTAT): According to the monthly Labour Force Survey by ELSTAT, the annual rate of employment growth slowed to 0.4% in the April–May 2026 period, from 1.2% in the first quarter. This development is an indication of a slowdown in economic activity during the second quarter.
- Employment has for many years been the main factor in increasing Greece’s real Gross Domestic Product (GDP), while the contribution of labor productivity remains limited. However, maintaining this growth model in the long term faces significant constraints due to demographic shrinkage and the resulting reduction in the labor force.
- Retail trade (ELSTAT): The retail trade volume index, a statistic showing the volume of sales, decreased in April 2026 by 1.4% on a monthly basis and by 0.1% on an annual basis. The product categories that recorded a decrease in sales compared to March were: fuels and lubricants for vehicles (-5.5%), books-stationery-other items (-4.5%), food-drinks-tobacco (-2.1%), and clothing-footwear (-2.1%). The rise in inflation during the second quarter creates downside risks for the rate of increase in private consumption.
- Industrial production (ELSTAT): The industrial production index fell by 3.5% on a monthly basis in April 2026, compared to an increase of 1.4% in March, while on an annual basis it continued to rise, albeit at a slower pace (2.7%). Of the four main sectors of industry, the largest monthly decrease in production was recorded in electricity supply (-18.4%), followed by water supply (-2.0%), manufacturing (-1.8%), and mining-quarrying (-0.5%).
- External sector (BoG): Exports of goods and tourism receipts maintained their upward trend in April 2026. The former increased annually by 13.6% in constant prices (5.5% excluding fuels), while the latter rose in current prices by 9.6%.
- Private sector financing (BoG): The annual growth rate of private sector financing by domestic Monetary Financial Institutions (MFIs) remained at high levels, standing at 7.1% during the April–May 2026 period, compared to 7.6% in the first quarter of the year. The continued credit expansion, combined with resources from the Recovery and Resilience Facility (RRF) and the establishment of a climate of fiscal discipline and financial stability that characterizes the Greek economy, contribute positively to strengthening investment.
Overall, the high-frequency indicators available so far suggest that the Greek economy maintained its resilience during the second quarter of 2026, despite intense geopolitical and energy uncertainty. However, the slowdown recorded in certain “hard” indicators, combined with the persistence of inflation at relatively high levels, increases the likelihood of milder economic growth compared to the previous quarter.
At the same time, the de-escalation of geopolitical tensions and international energy prices after mid-June creates conditions for a gradual improvement of the macroeconomic environment during the second half of the year.