Middle East Conflict: Impact on the Greek Economy

The prolonged conflict in the Middle East threatens the Greek economy with high inflation and slower growth, according to an analysis by Alexandros Kasimatis. Pressures on consumption, investment, and tourism are increasing, raising the risk of political developments.

The Governor of the Bank of Greece, G. Stournaras, stated that the Greek economy's growth rate will slow to 1.9% this year, mainly due to a milder increase in consumption and the negative contribution of the external sector. Inflation is expected to stall in 2026 due to external pressures from international energy markets, with headline inflation rising to 3.1%.

Mr. Stournaras emphasized that the Greek economy has resilience factors, such as a strong fiscal position and support from the Recovery Fund. However, inflation could reduce disposable income, while tourism is vulnerable to geopolitical crises.

The CEO of JP Morgan warned of the risk of shocks in oil and commodity prices, which could keep inflation high and drive interest rates higher.

If the conflict continues, the effects will multiply, with ECB economists estimating that inflation could reach up to 6.3% in the event of energy supply disruptions until the end of 2026.