Greece’s central bank chief warns of similar global economic risks in 2027
Bank of Greece Governor Yannis Stournaras has warned that the global economy will face many of the same risks in 2027 as it does this year, highlighting supply and demand shocks, fiscal difficulties in some countries and tariffs as potential sources of economic instability.
Speaking to Anadolu Agency (AA) on the sidelines of the Istanbul Economics Forum, held on October 8-9 at the Istanbul Financial Center and organized by the Central Bank of the Republic of Türkiye (CBRT), Stournaras discussed the outlook for the global economy and the euro area.
He said policymakers would continue to face challenges stemming from trade restrictions, economic imbalances and disruptions to supply and demand.
INFLATION REMAINS A KEY CHALLENGE
Stournaras said inflation in the euro area remained elevated, pointing to a latest reading of 3.8%, compared with the European Central Bank’s (ECB) target of 2%.
“We need to bring inflation down,” he said, stressing the importance of keeping inflation expectations under control.
According to Stournaras, gradual interest rate increases had helped reduce inflation without triggering financial instability in the banking sector or pushing the economy into recession. He expressed confidence that a similar approach could continue to deliver results.
However, he noted that supply-side shocks pose particular difficulties for central banks because monetary policy is generally better equipped to address demand-driven pressures.
Stournaras said the ECB’s credibility, built through substantial efforts over the years, had helped keep inflation expectations anchored. He argued that maintaining this credibility would remain essential until headline inflation returns to the target level of 2%.
AI SHOULD COMPLEMENT WORKERS, NOT REPLACE THEM
Stournaras also highlighted artificial intelligence (AI) as a major issue for the future of the labor market.
He said the debate over whether AI would replace workers or complement their work remained central to discussions about the technology’s economic impact.
“I hope it will be the second option, meaning that it will largely complement labor rather than replace it,” he said.
The Bank of Greece governor emphasized the need for strong institutions to protect people from the potential negative consequences of AI. He called for policies that preserve the technology’s benefits while establishing mechanisms to address its harmful effects.
STROUNARAS CALLS FOR ECONOMIC COOPERATION OVER TRADE RESTRICTIONS
Stournaras also expressed strong support for international economic cooperation over protectionist trade policies.
He argued that a world with lower tariffs, fewer geopolitical conflicts and a renewed commitment to economic cooperation could deliver substantial improvements in global prosperity.
“If we imagine that tariffs around the world fell to zero, geopolitical conflicts ended and a new era of economic cooperation began, you cannot even imagine the increase in prosperity this would bring to everyone on this planet,” he said.
His remarks come as policymakers continue to grapple with inflation, trade tensions and geopolitical uncertainty, all of which could shape the global economic outlook in 2027.
