The global economy in 2026 and beyond - financing Europe and Greece's future

The global economy in 2026 faces numerous challenges, particularly in financing Europe and Greece's future. Despite a recent drop in energy prices due to the US-Iran agreement, tensions have resurfaced, causing new volatility in oil prices. Inflation in the Euro area fell to an unexpected 2.8% in June 2026, but its future remains uncertain.

The Greek banking sector has undergone a significant turnaround. Today, it plays a crucial role in the economy, with strong credit growth driven by favorable conditions, the Resilience and Recovery Facility (RRF), and other EU structural funds. Greece has the highest RRF allocation as a share of its national GDP in the EU, making the Facility a key driver of the country's economic growth.

However, the RRF's impact will gradually diminish after 2026. Nonetheless, Greece has secured funding for RRF-financed private projects that will continue until 2029, and resources from the EU's Multiannual Financial Framework (MFF 2028-34) and the European Investment Bank will further support the economy. Greece's fiscal credibility, sound banking sector, and normalised access to international capital markets have improved, but bank lending alone will not suffice.

To sustain convergence to the EU, Greece must broaden its financing ecosystem. This includes strengthening corporate bond and equity markets, institutional investors, venture capital, and public-private partnerships. Additionally, fostering financial literacy and encouraging long-term household saving is crucial. The combination of temporary European support and permanent domestic capabilities, such as stronger institutions, more productive firms, better skills, and higher export capacity, is essential for Greece's future success.