The Governor of the Bank of Greece, Yannis Stournaras, during his speech at the annual General Assembly, emphasized the need to ensure political stability, especially in this current climate of heightened international uncertainty due to the war in the Middle East. As he characteristically stated: “In periods of increased uncertainty, political stability is a decisive factor for economic resilience. The experience of recent years demonstrates that political stability and a predictable institutional environment are of crucial importance for maintaining macroeconomic balance and for effectively managing external crises.”
Greek economy growth rate expected to slow to 1.9% in 2026 – Geopolitical tensions affect growth and inflation
Referring to the prospects of the Greek economy, Mr. Stournaras noted that in an environment of heightened geopolitical tensions, the growth rate of the Greek economy is expected to slow to 1.9% in 2026, mainly due to milder consumption growth and the negative contribution of the external sector.
Similarly, a significant slowdown is projected for the eurozone economy, with the growth rate declining to 0.9% (from 1.4% in 2025) due to the impact of the Middle East war, increased uncertainty, and disruptions in the energy market, which strengthen the risk of stagflation. Despite the moderation in growth rate, the Greek economy is expected to continue developing faster than the eurozone, confirming its enhanced resilience and continuing the process of real convergence.
Investments are estimated to remain the main lever of growth, supported by resources from the Recovery and Resilience Mechanism, credit expansion, and foreign direct investment.
Private consumption is projected to continue increasing, supported by rising employment, wages, and disposable income, albeit at a somewhat milder pace compared to the previous year.
Labor market
Regarding the labor market, prospects remain favorable, with further strengthening of employment and a decline in the unemployment rate to 8.2%. The deceleration path of inflation is estimated to be interrupted in 2026, due to the rekindling of external cost pressures from international energy markets. General inflation is projected to increase to 3.1% and remain higher than the eurozone average.
Fiscal indicators are projected to remain at healthy levels in 2026, maintaining a high primary surplus (approximately 3.2% of GDP) and a marginally surplus overall result, while the declining trajectory of public debt is expected to continue.
Increased uncertainty
Regarding the monetary policy that the ECB will follow in 2026, he pointed out that it is characterized by increased uncertainty, but also the need to maintain a high degree of flexibility.
In the case where energy price increases threaten to transform into more generalized and persistent inflationary pressures, affecting medium-term inflationary expectations and wage developments, then a stricter direction of monetary policy is expected.
Regarding banks, prospects according to the Bank of Greece governor remain positive, as the strong performances of 2025 create favorable conditions for further strengthening of resilience, profitability, and their capital base. However, the current geopolitical uncertainty constitutes a risk factor for funding costs, loan portfolio quality, and credit expansion dynamics.
In conclusion, as the Bank of Greece governor noted, the current international upheavals constitute for Europe not only a threat, but also a clear wake-up call. In this light, strengthening the eurozone’s resilience requires acceleration of European integration and more effective coordination of common policies.
Regarding the country’s domestic situation, he argued that maintaining the political will to implement credible reform policies is the key to transforming crises into opportunities and shaping a modern, sustainable, outward-looking, and competitive economy.
