Bank of Greece governor Giorgos Provopoulos said on Monday that recession may reach 3%, while unemployment rare may exceed 15%. Average annual inflation is expected to decelerate significantly to 3.25%, however, credit expansion will remain in negative territory.
Moreover, he expects improved competitiveness through a fall of inflation and drop of labour cost, while the deficit of current accounts will be below 9% of GDP.
Speaking at the general meeting of Bank of Greece shareholders, Giorgos Provopoulos repeated himself that a restructuring of Greek debt is neither necessary nor desirable, and cited that the crisis is not a result of the Memorandum of Understanding, but comes from the past growth pattern.
"The memorandum reduced the severity of the symptoms of the crisis”, the governor stated. Public debate and awareness of the causes of the crisis was scrappy and incomplete.
According to Giorgos Provopoulos, priorities of fiscal policy should be:
- The acceleration of reform in the public sector in order to reduce operational costs,
- Attracting of foreign investment,
- Improving of competitiveness by accelerating reforms,
- Exploiting of growth potential
Regarding banking system, the governor said that is has faced facing unprecedented challenges, and faced factors that affected its performance, in an environment of uncertainty.
“Greek banks should adjust their business model”, he said. Reorganization and mergers are successful when are launched with predictive capability, taking into account all the data as a result of a friendly negotiation, Giorgos Provopoulos concluded.
source: CAPITAL
