Greece faces geopolitical inflation and housing challenges

Geopolitical tensions are driving a new wave of supply-side inflation, impacting energy, transport, and supply chains. Unlike demand-driven inflation, this trend is fueled by wars, sanctions, and threats to maritime routes, which alter the cost and availability of food and raw materials.

In Greece, Bank of Greece Governor Yannis Stournaras highlighted the economic importance of the Attica region, which generates approximately half of the national wealth. Addressing the housing crisis, Stournaras suggested that instead of only building new structures, there is a need to utilize existing closed housing to meet the demands of high tourism and population concentration.

Stournaras also drew parallels to the ancient Greek economy, describing it as a success story of pre-industrial societies characterized by institutional innovation and property rights protections. He emphasized the need for Athens to transition into a more productive and innovative metropolitan model to better distribute growth throughout the country.