The energy rate shock from the war in the Middle East has led the Bank of Greece to adjust its forecasts for the Greek economy, now projecting growth of 1.9% this year and inflation rising to 3.1%.
As stated in the central bank’s “Note on the Greek Economy,” the new forecasts are based on the key assumptions in the ECB’s March 2026 Macroeconomic Projections Exercise, which imply significantly higher energy commodity prices due to the war in the Middle East. They use the assumption that oil and gas prices will peak at around $90/barrel and €50/MWh respectively in the second quarter of 2026, and then decline in the following quarters.
Consequently, the bank now forecasts that the Greek economy will grow by 1.9% in 2026, down from the 2.1% it previously expected, without additional fiscal and monetary policy measures due to the war, and by 2% in the period 2027-2028, however, exceeding the growth of the euro area. That growth, as it says, will come mainly from private consumption and investment, while the contribution of net exports is expected to be marginally negative.
Inflation is projected to remain high, at 3.1% in 2026, up from 2.1% in the previous forecast, reflecting higher energy and unprocessed food prices and the maintenance of inflation in services. Over the forecast period, inflation will gradually moderate (to 2.4% in 2027 and 2.3% in 2028) as energy commodity prices are expected to ease.
As the bank adds, the risks surrounding the growth forecasts are primarily downward and relate mainly to a further escalation of the war and the subsequent escalation of economic uncertainty, a further strengthening of trade protectionism internationally, more persistent inflation and unpredictable climate phenomena.
On Thursday, the ECB presented the new forecasts of its experts, which exceptionally incorporate information up to March 11, a later than usual date for inclusion of data, while they do not have any clear assumptions about the duration and intensity of the war.