Greece remains among the economies that stand out in Europe, along with the Iberian Peninsula, parts of Central and Eastern Europe and certain Scandinavian countries, according to the quarterly update of the main macroeconomic scenarios of Morningstar DBRS for the rated sovereigns, published today.
The agency forecasts 1.8% growth for the Greek economy in 2026, down by 0.1 percentage point compared with its June forecasts. For 2027, the estimate remains unchanged at 1.8%. These rates are clearly higher than those of the major eurozone economies. For France, DBRS forecasts growth of 0.5% this year and 0.9% in 2027, for Germany 1.0% and 1.2%, and for Italy 0.8% and 0.7% respectively. Above Greece are Spain (2.5% and 1.9%) and Portugal (2.0% and 1.8%).
Improvement is expected in the labor market. Unemployment in Greece is estimated at 8.3% in 2026, slightly lower (by 0.1 point) than the previous forecast. In 2027 it is projected to decline to 7.8%. Despite the drop, the rate remains among the highest in the DBRS sample, after Finland (10.3%), Spain (10.0%) and Sweden (8.6%).
The European economy is holding up, but at low speeds
Overall, DBRS describes growth in advanced economies as subdued but resilient. France, Germany, Italy and the United Kingdom are expected to grow at a rate of 0.5% to 1.0% this year and to accelerate only slightly, to 0.7% to 1.2%, in 2027. Manufacturing is slow to recover, partly due to increased competition and imports from Asia. The US stands out among advanced economies with growth of 2.1% in both years. In emerging markets, India (6.7%) and China (4.6% this year) stand out.
The agency attributes the global economic environment to a “technological arms race.” Strong demand for investment in technology, mainly in artificial intelligence, energy infrastructure and the defense industry, together with protectionism and supply-chain diversification, supports growth. At the same time, however, it increases demand for long-term capital and puts upward pressure on long-term yields.
Oil and the Strait of Hormuz are the major risk
DBRS warns that risks remain clearly tilted to the downside. Oil prices fell for much of the third quarter, but surged again in September after the Houthi attacks. The attacks further constrain the prospects for oil exports from the Middle East. Brent is trading significantly higher than WTI, while natural gas prices are rising sharply ahead of winter.
According to the agency, Iran is in a strong position to obstruct exports through the Strait of Hormuz for the foreseeable future, and the Houthis’ actions extend its reach. If Saudi exports are disrupted both through Hormuz and through the Red Sea, DBRS expects further deterioration in the forecasts. This will happen as the effect of demand-restraining measures weakens, inventories are depleted and new shortages emerge. The energy crisis fuels inflation while at the same time hurting households’ purchasing power. For this reason, as the agency notes, central banks may act based mainly on underlying demand conditions.