Stournaras: Economy is stable, but if the gov’t hands out checks we’ll go back to 2010

In a turbulent planetary environment, Greece for the archetypal clip stands retired positively, Bank of Greece Governor Yannis Stournaras said connected Monday successful a vigor interview.

Speaking connected Skai radio, the cardinal banker noted that the Greek system is increasing astatine twice the complaint of the remainder of Europe, while its astir important accomplishment successful caller years has been reducing nationalist indebtedness arsenic a percent of GDP by astir 10 points annually.

“We cannot accidental that wealth is distributed exclusively to the rich. Very fewer believed we would negociate to flooded the crisis, and we should sphere this achievement,” helium said. “Fiscally, we person near down the atrocious past, but we indispensable present stress reforms. Overall, we are doing well, but not perfectly – we tin bash better.”

“The strong gross show creates fiscal leeway, and the European Commission has signaled that some of it tin payment citizens. We are reducing indebtedness by 10 points a year, this is the astir important success,” helium added, stressing that Greece will not instrumentality to the brink of bankruptcy if it continues connected this path. “Of course, if the premier curate were to manus retired checks again, we could find ourselves backmost successful 2010. Redistribution done income tax proves much effectual than immoderate VAT reduction,” helium emphasized.

Responding to a listener, Stournaras said that what matters for the Bank of Greece is compliance with European Commission rules, which are present much flexible and acceptable a ceiling connected each subordinate state’s spending.

“When investments lag, productivity and existent incomes besides lag – it is simply a concatenation reaction. Due to the crisis, we fell very debased successful terms of purchasing power. Now we are slowly converging with the European average, astatine a complaint of 1.5%. If we raised salaries by 30% tomorrow, we would spell bankrupt. You cannot summation wages successful a state unless you archetypal summation productivity. Productivity means reforms and investments that marque the system much flexible. Since 2019, Greece has seen a 60% summation successful investment, with four-fifths of it successful productive sectors.”

Regarding the minimum wage, helium said that successful each countries it involves some grade of state intervention. “If this were not the case, it mightiness beryllium little than it is today. But this does not mean the state determines each salaries – the minimum and the mean wage are antithetic things,” helium said.

“Unfortunately, there is nary metallic bullet. To assistance wage increases, there indispensable beryllium a reflection of productivity,” helium added.

At the aforesaid time, helium referred to antagonistic aspects of the country’s economical reality, such arsenic the information that some citizens still bash not gain a monthly salary. “That is why the authorities should absorption connected the astir vulnerable. Greece’s ostentation is higher than the remainder of the eurozone,” helium said.

“Inflation is forecast astatine 3.1% for 2025, gradually easing to 2.6% successful 2026 and 2.4% successful 2027. Prices roseate globally aft the pandemic disrupted supply chains, and then Russia invaded Ukraine, but since then ostentation has been gradually falling. This tin lone beryllium addressed by expanding wages successful enactment with productivity, arsenic well arsenic subject successful nationalist finances.”

Finally, helium urged bankers to set their involvement rates, warning that contention from integer banks such arsenic Revolut is looming.