The government’s economic team is on heightened alert following the outbreak of war in Iran, monitoring minute-by-minute developments in international energy markets, while European coordination takes on particular importance as Kyriakos Pierrakakis chairs the Eurogroup at an extremely critical juncture for the Eurozone.
One immediate consequence of the Middle East escalation is soaring oil prices. Due to the strategic importance of the Strait of Hormuz, through which approximately 20-30% of global oil production passes, any disruption to transit burdens energy markets. Brent prices increased about 10% and many analysts predict a possible rise above $100 per barrel if the turmoil continues.
For Greece, which remains a net energy importer, this translates to increased costs for fuel, electricity and transportation. The experience of the energy crisis following the war in Ukraine showed how vulnerable the Greek economy is to external energy disruptions. A new energy shock could reignite inflation, compress household purchasing power and increase operating costs for businesses, particularly in sectors like industry, agricultural production and transportation.
It should be noted that the 2026 budget was drafted assuming the average international crude oil price would be $62.4 per barrel. Growth, inflation and fiscal projections were based on this estimate. If the conflict proves prolonged, the initial assumptions will be overturned. Already in the ministries of National Economy and Development there is intense concern about how oil and gasoline prices will react in the domestic market from today.
In tourism, which constitutes a key growth driver, concerns focus mainly on the crisis duration. If the escalation proves brief, the impact may be limited. However, should tensions persist longer, there are fears of booking slowdowns, particularly from distant markets that are more sensitive to geopolitical risks. The stability image of the Eastern Mediterranean is a critical factor for maintaining tourism momentum. While Greece is considered a safe destination, international travel flows often slow during periods of regional tension, with potential impacts on tourism revenue.
Uncertainty also affects investments, as foreign investors may adopt a wait-and-see approach, particularly in sectors like energy and infrastructure. Any deterioration in the international climate could increase borrowing costs and affect Greek bond yields. The international financial community is waiting with bated breath to see how markets will open today.
Regarding shipping, one of the economy’s most dynamic and export-oriented sectors, there are already recorded increases in risk premiums and concerns about possible route redirections due to military operations in the Middle East. Rising chartering and insurance costs are passed on to international trade, affecting imports and exports.
Most concerning, however, is reflected in the budget’s “nightmare” sensitivity scenario. According to this, if oil prices exceed $100 per barrel:
- Private consumption will decrease by 0.7% compared to the baseline scenario (which projects 1% growth in 2026), while investments will decline by 0.9%.
- In real terms, imports will decrease due to falling domestic demand, but in nominal terms will increase by approximately 7.4%, with the current account deficit worsening by 0.2 percentage points.
- Inflation will surge to 4.7% versus 2.2% in the baseline scenario.
- Real GDP will slow to 1.9% versus a 2.4% forecast, although nominal GDP will increase due to inflation, leading to marginal improvement in the fiscal balance and a debt ratio reduction of 1.4 percentage points compared to the baseline scenario.
As government sources emphasize, the extent and duration of the conflict will determine whether the impacts will be manageable or if the Greek economy will face a new cycle of strong external shocks.
