Economic activity remained resilient in Q1:2026, despite early spillovers from the M. East crisis. GDP increased by 2.0% y-o-y (+0.2% q-o-q), with a softer outcome relative to the March NBG baseline, reflecting a sharp inventory drawdown and moderating residents’ services consumption.
On a positive note, fixed capital investment remained the dominant growth driver for a 4th consecutive quarter. GFCF rose by 12.1% y-o-y, contributing 2.0 pps to annual GDP growth − exceeding 18.0% of GDP since mid-2025 (a 16-year high).
Underlying investment dynamics remain strong, supported by the large project pipeline, high capacity-utilization, supportive financing conditions, strong FDI inflows, and accelerating RRF-related capex.
Also positive was that net exports added 0.6 pps in Q1 GDP, as total exports growth (+2.4% y-o-y) exceeded imports (+0.5% y-o-y) with half of export growth attributed to tourism.
In fact, tourism recorded exceptionally strong performance in Q1:2026, with receipts rising by 64.3% and arrivals by 38.3% y-o-y, showing no visible geopolitical impact through March, while goods exports increased by 2.8% y-o-y (constant prices), supported by stronger refined petroleum product exports.
Private consumption growth eased to 0.7% y-o-y in Q1 – the slowest pace in five years – reflecting both adverse base effects and rising uncertainty, as consumer confidence declined to its lowest level since late 2022 and inflation expectations increased to 4-year highs.
The consumption slowdown in Q1:2026 was concentrated in services − an estimated drop in services consumption by residents of c. 4.0% y-o-y in real terms, particularly in food, accommodation, and leisure categories − whereas retail sales volumes remained robust (+3.8% y-o-y). Consumers appear to be front-loading purchases of goods and engaging in stockpiling, while cutting back on discretionary services, consistent with elevated inflation expectations and declining confidence.
Public sector activity gained traction, with government consumption increasing by 1.6% y-o-y and PIB & RRF related expenditure by 15.5% y-o-y, jointly contributing +0.6 pps to Q1 GDP growth.
The continued inventory drawdown for a 4th consecutive quarter reduced GDP growth by 1.5 pps − marking the most pronounced depletion cycle since 2008 − reflecting robust demand for goods, intensified absorption of production inputs, and supply-chain frictions constraining the timely rebuilding of inventories, particularly in the energy sector.
Available monthly indicators point to a temporary easing in activity in Q2:2026, with the NBG nowcasting model projecting a q-o-q contraction in GDP of -0.2% (implying a y-o-y growth of 1.4%), reflecting mainly weaker household sentiment, amid higher oil prices and rising inflation pressures, softer labour market conditions in April, and increased caution in the services sector. Assuming a partial easing of energy price pressures by Q3 and an improvement in sentiment, GDP growth should reach 1.7% y-o-y in FY:2026, edging close to 2.0% y-o-y in H2:2026.