The results in the Greek economy will be limited by the increase in dictatorial from the US, according to the assessment of the Bank of Greece Governor, Giannis Stournarawho announced another reduction in the ECB’s interest rate to 2%.
Speaking to the CEO Club, Mr Stournaras said that “Greece has little dependence on the US and is therefore expected to have a limited immediate impact on duties.” However, he said, “it may be indirectly affected, as a comprehensive slowdown in world trade can reduce demand for Greek products and services and limit growth prospects. Finally, increased uncertainty in markets is a deterrent to investment, as businesses avoid taking risks in an unstable environment. “
At the same time, however, recent upgrades of both Greek government and banks’ credit ratings make the Greek economy as a positive exception to the current environment of increased volatility internationally.
Regarding the ECB’s subsequent moves, the BoG commander said that “the policy rates, in my view, will continue to decline until they reach 2%. Markets also discount further reductions, but I believe that we must be cautious because of the very high uncertainty. “
In addition to international and European risks, additional uncertainties about the prospects of the Greek economy according to the BoG Governor are:
- Possible delays in absorbing and exploiting the resources of the recovery fund,
- The increasing frequency and intensity of natural disasters due to climate crisis and
- The growing narrow labor market and higher wage increases.
Effectively addressing all of the above challenges, a cohesive economic policy strategy is required, with a focus on fiscal balance, financial stability, reform consistency and the enhancement of productive investment. At the same time, it is crucial to accelerate absorption and effectively utilize the resources of the recovery fund, with the aim of reducing investment gap, strengthening the potential product and structural competitiveness and overall improved economy resilience.
According to the Bank of Greece’s latest estimates, growth rate is expected to be maintained at 2.3% and in 2025 – level much higher than the eurozone average. Private consumption and investment will continue to be the driving forces of growth. The ongoing recovery of economic activity will be accompanied by further decline in unemployment to 9.9%, while inflation is expected to subside slightly to 2.9%.
Financial sizes are estimated to remain at a healthy level in 2025. The primary surplus is projected to stand at 3.2% of GDP and the public debt to continue its downward trend, reaching 143.2% of GDP.
Source: RES – EIA