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The Greek Economy: Past, Present and Future

The American College of Greece recently hosted an insightful discussion featuring Yannis Stournaras, the Governor of the Bank of Greece, who captivated an audience with a thorough examination of the Greek economy’s evolution, current state, and its promising future. Organized by the Institute for Hellenic Growth and Prosperity (IHGP) along with the Economics Society of Deree – ACG, this event took place on April 3, 2024, attracting students, faculty, and economics enthusiasts alike.

Michalis Psalidopoulos, Chief Consultant and Chair of the Advisory Board of the IHGP, warmly welcomed Governor Stournaras and all participants, setting the tone for a session filled with depth and perspective. Governor Stournaras embarked on a retrospective journey, recounting the major economic and political events that shaped the trajectory of Greece within the Eurozone and a possible Grexit, emphasizing the critical support from the Bank of Greece and the European Central Bank during these challenging periods.

The Governor also presented the main economic achievements of Greece during the last years as well as the basic financial projections of the Bank of Greece for GDP in the near future: 2.3% for 2024, 2.5% for 2025 and 2.3% for 2026.

Highlighting the resilience and “remarkable progress” of the Greek economy, Governor Stournaras shared uplifting economic achievements and forecasts. He pointed out the recovery in the banking sector, particularly the reduction of Non-Performing Loans, suggesting incentivization in the private insurance sector to cover the Insurance Protection Gap, including catastrophes like earthquakes, floods, and wildfires, as well as in health and pensions.

With a focus on investment opportunities in the Greek market, Stournaras celebrated the revival of corporate investment to pre-2010 levels. Yet he expressed concerns over the total investment-to-GDP ratio’s lagging relative to the EU average (22.0%), mainly due to a decline in housing investments over the last decade.

Addressing the road ahead, the Governor identified the main challenges that the Greek economy is facing, including delays in the delivery of Justice, bureaucratic hurdles, and poor infrastructure. Further, he discussed the slow implementation of the National Cadastre and of Land Use plans. He recommended setting a primary general government surplus of 2% cyclically adjusted. Mr. Stournaras stated that achieving real convergence without macroeconomic imbalances is the main goal of the Greek economy. He emphasized the challenge of leveraging the investment grade rating that Greece has achieved to quickly advance to a higher credit rating.

The session concluded with a dynamic discussion with ACG students and faculty from Deree and Alba Graduate Business School, reflecting the engaging and visionary insights provided by Governor Stournaras. His presentation not only recounted the trials and triumphs of the Greek economy but also charted a hopeful path forward, highlighting strategic goals and the enduring spirit of resilience and ambition.