The governor of the Bank of Greece, Yannis Stournaras, spoke of stagflation winds blowing in the global economy, who argued that Europe underestimated the dangers of war.
In particular, speaking to SKAI 100.3, Yannis Stournaras pointed out that the risk factors stem from the fact that Russia is an energy giant and we depend on it.
Speaking about Greece, he said that it is very lucky, because tourism revenues are doing much better this year than expected.
He also added that the BoE would need to revise its growth forecasts upwards.
Asked about the government subsidies, Mr. Stournaras said that “the government gives money, it does its best, it cannot do more”.
He added that the winter will be difficult for all of Europe, hence the decision taken yesterday at the Council of Energy Ministers to reduce the consumption of natural gas.
Speaking about the Greek economy, he said that we should return to primary surpluses, in order to pay the interest on the national debt.
“In the medium term we should return to fiscal balance,” he said and added: “You see what is happening in Italy. As soon as Draghi resigned, the spreads increased.”
However, he noted that he does not see such a risk for Greece and underlined that the lesson from Italy is that strong governments are needed to take measures when necessary.
According to Mr. Stournara, “technocratic governments do not thrive in difficult times, as was seen in Italy.”
“Greece must always have a strong government, which can take measures, as happened now with the war in Ukraine,” he stressed.
The central banker estimated that interest rates will not rise much and in fact from the end of 2023 or even in 2023 they will start to fall.
He noted that 80% of the increase in inflation in Greece is exogenous due to increased energy and food prices as a result of the war.
If the war stops, he added, the economy will begin to improve dramatically, both globally and in Greece.
He described the investment level as an achievable goal, stressing that in order to achieve it we must be fiscally stable.
If we succeed, hybrid funds will flow into Greece, he estimated.
Source: Capital
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