Tuesday, 15 September 2026
Greece maintained its economic expansion during the first half of 2026, supported by improving employment, industrial activity, tourism and continued investment. Growth remained relatively steady despite weaker conditions across parts of Europe, although rising inflation emerged as a more significant challenge for households and businesses towards the end of the period. The economy expanded by 0.3% during the second quarter compared with the first three months of the year and was 1.9% larger than in Q2 2025. This followed continued expansion during the opening quarter, leaving Greece with positive growth through the first six months of 2026.
Investment remained an important part of the economic picture, supported by European funding, infrastructure programmes and private-sector projects. Greece continues to deploy substantial resources through EU-backed programmes, although the contribution from these funds is expected to become less significant as the current funding cycle approaches completion. Consumer demand also continued to support economic activity, but the improvement was relatively modest. Household finances benefited from stronger employment, while renewed increases in living costs, particularly those associated with housing and energy, placed additional pressure on purchasing power.
Industrial activity provided another positive element during the first half. Production increased by 1.1% year-on-year in June, while output across January to June was 3.3% higher than during the corresponding period of 2025. The increase provided an additional source of economic activity alongside Greece’s larger services and tourism sectors. Retail activity also remained positive, with inflation-adjusted retail sales 1.9% higher in June than a year earlier, although sales volumes declined compared with May after seasonal adjustment. This suggests that consumer activity continued to expand on an annual basis while showing some loss of momentum towards the end of H1.
The labour market recorded further improvement. During the second quarter, employment increased compared with the same period of 2025, while the number of unemployed people declined. The quarterly unemployment rate fell to 7.9%, compared with 8.6% in Q2 2025. Monthly figures similarly showed unemployment declining towards the end of the first half, with the seasonally adjusted rate standing at around 8% in June, substantially below its level a year earlier. The continued improvement represents an important structural change for an economy that experienced exceptionally high unemployment during the decade following the sovereign debt crisis. The tighter labour market is also creating new challenges, with employers in sectors including tourism and construction increasingly facing difficulties finding workers.
Inflation became one of the principal economic concerns during H1. Consumer prices were 4.4% higher in June than a year earlier, compared with annual inflation of 2.8% in June 2025. Housing-related expenses were among the areas experiencing particularly strong price increases. The category covering housing, water, electricity, gas and other household fuels increased by 10.6% year-on-year in June, while food and non-alcoholic beverages were 2.7% more expensive. Higher accommodation and energy costs are particularly relevant for the property market. Improving employment supports housing demand, but rising rents, utilities and other household expenses can simultaneously increase affordability pressures, particularly in Athens and locations experiencing strong tourism and residential demand.
International trade presented a mixed picture. During the second quarter, exports of goods and services increased by 2.2% year-on-year in real terms, while imports grew by 3.7%. Goods exports performed more strongly, increasing by 6.6%, while exports of services declined by 1.7%. The difference between export and import growth illustrates one of the continuing characteristics of the Greek economy. Stronger domestic demand and investment generate additional imports, leaving the country exposed to movements in international energy and commodity prices even as export capacity improves.
Tourism remained an important source of economic activity as the summer season gathered momentum. In June, Greek hotels, campsites and other short-stay accommodation establishments recorded approximately 5.58 million arrivals and 24.06 million overnight stays. Arrivals increased by 1.3% compared with June 2025, while overnight stays were 1.4% higher. International visitors remained responsible for the majority of tourism activity, accounting for around 82% of arrivals and almost 90% of overnight stays during June. The relatively moderate increase in visitor numbers also points towards a changing tourism investment story, with future growth in hotel revenues and property values likely to depend increasingly on accommodation quality, pricing, season extension and visitor spending rather than simply continued rapid increases in arrivals.
Greece’s economic outlook remains positive, although higher inflation has made the environment more complicated. The European Commission expects GDP to increase by approximately 1.8% across 2026 following growth of 2.1% during 2025, before moderating to around 1.6% in 2027. Inflation is expected to average approximately 3.7% during 2026 as higher energy costs continue to affect households and businesses. Investment supported by European funding is expected to remain an important contributor to economic activity during the year.
Greece’s public finances have also improved substantially compared with the conditions that defined the country during the sovereign debt crisis. The European Commission expects the general government balance to remain positive during 2026, with a surplus of approximately 0.8% of GDP. Public debt remains high but continues to decline relative to the size of the economy, with the Commission expecting the debt ratio to fall from approximately 146.1% of GDP in 2025 to 140.7% in 2026 and around 134.4% in 2027.
For Greece’s commercial property sector, the first-half economic picture remains broadly supportive. Improving employment can strengthen occupier and consumer demand, continued tourism activity supports hotels and hospitality property, and higher industrial production provides a more favourable environment for logistics and manufacturing-related facilities. There are nevertheless significant constraints. Higher inflation is reducing some of the benefit households receive from stronger employment, while rising energy and accommodation costs are increasing pressure on consumers. Development economics also remain sensitive to construction, financing and operating costs.
Greece entered the second half of 2026 with economic growth intact, unemployment continuing to decline and industrial and tourism activity providing support. At the same time, inflation has returned as a more prominent challenge and the economy remains exposed to external energy costs and international economic conditions. The longer-term question is whether Greece can maintain its current growth rate as the contribution from European recovery funding gradually diminishes. Sustained private investment, higher productivity and continued expansion of the country’s productive economy will become increasingly important if the improvement recorded during recent years is to continue beyond the present investment cycle.
Source: CIJ.World Research & Analysis Team
