Greek economy shows resilience amid Middle East tensions and EU fiscal debates

Alpha Bank’s latest report shows that Greece’s economy expanded by 2 % year‑on‑year in the first quarter of 2026, well above the Eurozone average of 0.7 %. Growth was driven by a strong rise in investment, which jumped 12.1 % YoY for a third consecutive quarter, adding two percentage points to GDP. Private and public consumption also increased modestly. Inflation, however, has accelerated under higher energy prices, rising from 3.1 % in February to 4.9 % in May, pressuring household purchasing power.

At the same time, European markets responded to a dip in oil prices below $90 a barrel and to comments by US President Donald Trump about a possible Iran agreement that could ease Middle‑East geopolitical risks. The Eurozone’s key interest rate stands at 2.25 %, while a north‑south split persists in the euro area over fiscal flexibility: Italy and other southern states seek greater leeway for household and business support, whereas northern countries push for limited measures focused on strategic energy and infrastructure investment. Eurogroup President Kyriakos Pierrakakis warned that even if tensions de‑escalate, inflation and growth impacts will linger, underscoring the need for accelerated energy‑sector investments. Analysts project Brent crude to average $112 per barrel in the second quarter of 2026, with natural‑gas prices potentially more than doubling if the conflict continues.