The Governor of the Bank of Greece, Yannis Stournaras, addressed pressing issues related to the country’s development, emphasizing the need for labor through immigration, as well as structural changes in the economy.
The governor pointed out, that immigration from preferred destinations could help alleviate the labor market shortages, but also highlighted internal solutions such as increasing the participation of women in the workforce. He also stressed the need to analyze young people’s choices regarding why they opt to stay with their parents, rather than find a job.
Stournaras, emphasized that Europe, including Greece, is facing a decline in its workforce due to its aging populations, stressing the need for immigrant laborers. “We cannot deny this, because if we do, we will be condemned to productive stagnation,” he noted.
Stournaras stressed that the country is faced with a 200,000 worker-shortage, highlighting the training programs provided by the Recovery Fund supporting employees without the necessary skills.
Despite the current global uncertainties, including wars on Greece’s borders, he remained optimistic about the country’s economic performance. He noted that Greece is growing at 2.3%, compared to Europe’s 0.7%–0.8%, which means Greece is continuing to converge with the rest of Europe.
The governor also indicated the positive trend of increasing per capita GDP, and fiscal discipline. He predicted a primary surplus of around 2.5% of GDP, for the Greek economy, with the country meeting the conditions of the Stability and Growth Pact.
Stournaras mentioned that on an annual basis, investments are growing by 2%, although he acknowledged a significant drop in quarterly investments, with the causes being investigated as he noted. The governor also highlighted the country’s recent upgrade by the credit agency Scope Rating.
Wages in Greece are also on the rise, with per capita wages for salaried workers increasing by 5.1%, outpacing inflation at 3%, he said. “The private sector offers higher wages than the public sector. Just a few years ago, Greece was essentially bankrupt. Of course, we can increase the productivity of all production factors, not just the workforce,” Stournaras claimed.
Addressing the burning issue of inflation and costly products, Stournaras categorically stated that reducing VAT on food will not solve the problem of high prices.
Stournaras also weighed in on potential global economic challenges, particularly those stemming from U.S. trade policies. He warned that if President Trump raises tariffs on Europe by 10% across the board, then there will be a 1% reduction in GDP. “We are expecting 1% growth next year, but if these policies are implemented, we will be at zero, at the limit,” said Stournaras.
He also highlighted that Europe must agree on what it wants at the European Council and, in his view, appoint a negotiator, in order to jointly address Trump’s intentions to impose tariffs on Europe if it doesn’t buy more American gas and oil.
Stournaras expressed his concerns on the impact the policies outlined during Trump’s campaign will have on consumers in Europe and America if implemented.
Regarding the current account deficit, he referred to it as a dark spot in the Greek economy, stressing that Greece needs to improve its capacity to produce internationally tradable goods and services.
Highlighting this fact he noted “We even import food… I find it absurd that we import fruits and vegetables from the Netherlands.”
