As the war in Iran enters its second month, Greece is bracing for the negative fallout to its economy, with the country’s Parliamentary Budget Office drafting a bleak trimester report.
The paper, presented by the chairman of the office, Prof. John Tsoukalas, warns of the adverse consequences, which, in the worst-case scenario would result in a simultaneous rise of inflation to 4.1% and a drop of growth to 1.7%.
During the presentation, Tsoukalas stated that the best-case scenario would be for the conflict in Iran to conclude before the end of summer.
In these conditions, the chairman also forecast the European Central Bank (ECB) would raise interest rates, at least once, while he did not rule out a second increase.
The report outlines a series of risks to the Greek economy, including the dangers of disrupting global energy markets and the supply chain, especially if problems persisted for energy cargo passing through the Hormuz Strait.
A prolonged escalation of Middle East hostilities could trigger a sustained rise in oil and natural gas prices, reignite inflation and temporarily constrain economic growth, according to an assessment that also flags rising fertilizer costs as a risk to agricultural production if the conflict drags on — a contingency that may require the activation of European support mechanisms.
The rise of trade protectionism and heightened global uncertainty represent a more immediate risk for the Greek economy, as they could weigh on eurozone growth, exports, investment and financing conditions.
Public Investment Shortfall
A lag in the execution of the Public Investment Programme at the start of the year constitutes a near-term growth risk. Investment expenditure in the January–February 2026 period came in €906 million below target and €464 million below the same period in 2025. Recovery and Resilience Facility (RRF) disbursements may nonetheless carry a stronger-than-expected positive impact on private consumption, investment and overall economic activity.