Alpha Bank: Greek industry confronts geopolitical uncertainty

However, this positive trajectory faces challenges from the ongoing war in the Middle East, which is affecting the energy sector and testing the resilience of Greek industry. Ensuring competitive energy costs has become more urgent than ever if the current industrial growth is to be sustained.

Alpha Bank’s economic analysts highlight the following:

One month after the outbreak of the conflict involving the United States, Israel, and Iran, the absence of clear signs of de-escalation underscores the energy factor as a key short-term macroeconomic driver. Attacks on energy infrastructure across the broader Middle East, combined with disruptions to shipping through the Strait of Hormuz, have heightened concerns about the risk of stagflation returning to Europe’s energy-import-dependent economies.

These developments are already reflected in international energy markets. Since the start of the conflict, oil and natural gas prices have surged by 49% and 75%, respectively, with the initial price reaction sharper than that observed during the early stages of Russia’s invasion of Ukraine. While the duration and macroeconomic consequences of the conflict remain uncertain, European and national authorities are considering interventions to mitigate the impact of rising energy costs on businesses. Notably, recent government measures primarily target households and the primary sector.

In a prolonged conflict scenario, energy-intensive industries are expected to be more directly affected than labor-intensive service sectors.

Beyond the immediate context, Greek industry faces structural challenges, particularly higher energy costs relative to the European Union average, which constrain competitiveness. Even if hostilities were to end immediately, normalization would take months, as production, transportation, and refining capacities would require time to return to full operation, leaving energy markets under-supplied.

Despite these challenges, Greek industry has strengthened its role in the country’s Gross Value Added (GVA), during a period of structural transformation. Over the past two years, the real GVA of industry has grown at rates significantly higher than overall GVA, increasing its share from 14.8% in 2023 to 15.2% in 2025, though still below the EU average of 19.2%. Manufacturing, which accounts for roughly 70% of industrial GVA, has shown similarly strong performance.

This upward trend is confirmed by several indicators, including industrial production, turnover, new business registrations, employment, and labor productivity. Productivity improvements are particularly significant, as low labor productivity has long been a critical weakness in the Greek economy. Between 2024 and 2025, labor productivity in industry rose approximately 12% based on employee numbers and 13% based on hours worked, while in manufacturing, the respective increases were 10% and 12%.

Industrial investments account for around 19% of total investments, and industrial exports represent 70% of total goods exports. Along with travel receipts, this helps partially offset the current account deficit.

Prior to the conflict, industry prospects were particularly favorable. The business expectations index for industry averaged 108.9 points in 2025, well above the long-term average, and reached 110.7 points in February 2026. The manufacturing PMI stood at 54.4 in February—the highest among the eight Eurozone member states surveyed—and has remained above the 50-point expansion threshold for three consecutive years.

In conclusion, while geopolitical risks pose significant challenges, Greek industry has emerged stronger, with improved productivity, investment, and export performance, positioning it as a key driver of economic growth even amidst global uncertainty.