Bank of Greece Governor Yannis Stournaras has warned that the risk of recession in the eurozone is real and should not be underestimated. In an interview with the Cypriot newspaper Phileleftheros, he said the European economy remains under pressure from rising energy prices, geopolitical tensions in the Middle East and potential disruptions to global supply chains.
According to Stournaras, high energy costs are creating a double burden: they are slowing economic growth while also fuelling inflation. This is particularly challenging for the eurozone, which remains heavily dependent on imported energy resources. The Greek central bank governor noted that the current energy shock comes at a time of weaker economic activity, tighter credit conditions and limited fiscal space in many member states.
The latest Eurostat data confirm a slowdown in economic activity. In the first quarter of 2026, eurozone GDP increased by only 0.1% quarter on quarter, compared with 0.2% in the previous period. On an annual basis, GDP grew by 0.8%.
At the same time, inflation in the euro area accelerated to 3.0% in April, up from 2.6% in March. The main driver of the increase was energy prices, which, according to preliminary estimates, were 10.9% higher than a year earlier.
In response to this environment, the European Central Bank left interest rates unchanged at its 30 April meeting, with the deposit rate remaining at 2%. The ECB acknowledged, however, that inflation risks had shifted upwards, while risks to GDP growth had deepened.
This combination of data puts the ECB in a difficult position. The central bank must balance the fight against inflation, which remains above its 2% target, with the risk that overly restrictive monetary policy could push a stagnating economy into a deeper recession.
Stournaras stressed that the ECB’s next steps will depend on the persistence of the energy shock. If the rise in prices proves temporary and does not become embedded in inflation expectations, a policy adjustment may not be necessary. However, if inflation remains persistently high, a more decisive response from the central bank may be required.
