Political stability crucial for Greece’s economy, says Bank Governor Stournaras

As he emphasized, “In periods of heightened uncertainty, political stability is a decisive factor for economic resilience. The experience of recent years demonstrates that political stability and a predictable institutional framework are crucial for maintaining macroeconomic balance and for effectively managing external crises.”

Referring to the outlook for the Greek economy, Mr. Stournaras noted that in an environment of elevated geopolitical tensions, Greece’s economic growth is expected to slow to 1.9% in 2026, mainly due to a milder increase in consumption and the negative contribution from the external sector.

Similarly, significant slowdown is expected for the eurozone economy, with growth projected to fall to 0.9% (from 1.4% in 2025), reflecting the impact of the war in the Middle East, heightened uncertainty, and energy market disruptions, which increase the risk of stagflation.

Despite the moderation in growth, the Greek economy is expected to continue expanding faster than the eurozone average, confirming its enhanced resilience and ongoing process of real convergence.

Investments are anticipated to remain the main growth driver, supported by resources from the Recovery and Resilience Mechanism, credit expansion, and foreign direct investments.

Private consumption is expected to continue rising, supported by higher employment, wages, and disposable income, albeit at a somewhat slower pace compared to the previous year.

Regarding the labor market, prospects remain favorable, with further employment gains and a decline in the unemployment rate to 8.2%.

The decline in inflation is expected to halt in 2026 due to renewed external cost pressures from international energy markets. Overall inflation is projected to rise to 3.1%, remaining above the eurozone average.

Fiscal indicators are expected to remain healthy in 2026, with a high primary surplus of around 3.2% of GDP and a slightly positive overall balance, while the downward trajectory of public debt is expected to continue.

Regarding monetary policy for 2026, he stressed that the outlook is characterized by heightened uncertainty and the need to maintain a high degree of flexibility. If energy price increases risk triggering broader and persistent inflationary pressures, affecting medium-term expectations and wage developments, a tighter monetary stance is anticipated.

Concerning banks, the Governor noted that prospects remain positive, as strong 2025 performance provides favorable conditions for further strengthening resilience, profitability, and capital base. However, current geopolitical uncertainty poses risks for funding costs, loan portfolio quality, and credit expansion dynamics.

In conclusion, the Governor stated that current international upheavals are not only a threat for Europe but also a clear wake-up call. Strengthening eurozone resilience requires accelerating European integration and more effective coordination of common policies.

Domestically, he stressed that maintaining political will to implement reliable reform policies is key to turning crises into opportunities and building a modern, sustainable, outward-looking, and competitive economy.