Greece’s economy would slow sharply in 2026 if the global energy crisis deepens amid escalating conflict in the Middle East, according to new projections from the country’s leading economic think tank, underscoring the vulnerability of Europe’s smaller economies to renewed geopolitical shocks.
The Foundation for Economic and Industrial Research said Greece’s gross domestic product would expand by 1.4% in 2026 under an adverse scenario in which disruptions to global energy supplies intensify, down from its baseline forecast of 1.8%.
The scenario assumes a severe escalation of tensions in the Middle East that would disrupt 60% of oil and natural-gas flows through the Strait of Hormuz in the second quarter of 2026 and take part of the region’s energy infrastructure offline, in line with the European Central Bank’s more extreme stress assumptions.
Such a shock would drive international energy prices higher, lifting costs for businesses, squeezing household purchasing power and dampening confidence across the economy, the institute said.
Private consumption—the main engine of Greek economic growth in recent years—would rise by only 1.4% under the adverse scenario, as households contend with higher inflation and energy bills. Public consumption is projected to increase by 0.9%, unchanged from the baseline forecast.
Investment would remain a relative bright spot despite the weaker macroeconomic environment. Fixed investment is forecast to expand by 10.2%, supported by continued deployment of European Union recovery funds, elevated public-investment spending and sustained foreign capital inflows.
Still, Greece’s external position would deteriorate further if geopolitical and trade conditions worsen. Export growth would slow to 1.5%, while imports are expected to increase 3.4%, widening pressure on the country’s external deficit.
