Growth of 3.8% – from 4.8% that was the previous forecast – for this year and inflation of 5.2% is predicted by the basic scenario of the Bank of Greece, according to the Governor of the Bank of Greece Mr. Giannis Stournara. The unfavorable scenario predicts a slowdown in growth to 2.8% and a jump in inflation to 7%.
Presenting the Annual Report, the BoG Governor argued that Greece has the historic opportunity to turn the current crisis into an opportunity. As he stated, the main goals of the economic policy in 2022 should be to maintain the dynamics of its growth, in order to expand the productive potential of the economy, and to continue the efforts for the recovery of the investment level, which should become a national goal.
Referring to the uncertainties that exist, Mr. Stounaras said that in the medium to long term, the most important external risk comes from the non-linearity of the climate crisis, which poses a serious threat to macroeconomic and financial instability. The risks for banks from the climate crisis are significant. Credit risk, which is related to the inability to service loans, market risk, as it negatively affects the value of assets, liquidity risk, to the extent that the climate crisis affects the sources of financing of banks, and operational risk due to losses. in infrastructure after natural disasters.
For the future argued that conditionally the Greek economy can ensure an average annual growth rate of 3% It is enough to take specific economic policy decisions, such as the digitization of the justice system, tackling the problem of private debt accumulation and accelerating the privatization program. In any case, it is crucial not only to make decisions but also their successful implementation. Therefore, in the short term, careful policy steps must be taken to consolidate the recovery, when the risk of a health crisis has not been completely eliminated, and the risk of stagnant inflation is small but not negligible.
Regarding the course of the banking system and red loans, Mr. Stournaras stated that despite their reduction, the stock of non-performing loans as a percentage of total loans (12.8%) remains much higher than the EU average (2.1%). ). About 39% of all NPLs are regulated. However, a high percentage of loans in regulated status was again delayed. It is estimated that, due to the pandemic but also the high inflation, an additional percentage of regulated loans may be recorded as MES in 2022.
He advised the banks to be constantly vigilant and to take more intensive action to reduce red loans. He stressed that banks face significant challenges, such as new NPLs that may arise after the withdrawal of support measures, but also due to high inflation, the obligation to meet the Minimum Equity Requirement and Eligible Liabilities (MREL), the the effects of the International Financial Reporting Standard, the effects of climate change and the adoption of new, digital technologies.
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