OT Forum -Prof. Vettas: Fiscal stability is a condition for the independence of Greece

“The effects on the Economy from the Ukrainian crisis and Geopolitics”, was the theme of the panel of the OT Forum with speaker Nikos Vettas, General Director of the Foundation for Economic & Industrial Research (IOBE) and professor of the Athens University of Economics and Business.

Mr. Vettas estimated that if there is an escalation in the crisis then the problems ahead of us will be very serious and not only financial

He noted, however, that if the situation eases in the coming months, then the economy would be able to “digest” the consequences: “The world economy has a huge stomach,” he said, adding that it “swallowed” Brexit, the extreme US trade policies under Trump, and also the debt crisis within the EU.

Referring to Greece, he said that the country ran very large deficits during the pandemic, arguing that it would now have to acquire supplies and adjust when there are new needs or when growth will not be what we wanted: “What we observe is that nothing is a given and that our environment will not always be favorable.”

Fiscal stability

Referring to fiscal stability, he said that it is not something that the country should do because the Europeans and the markets want it: “It is a condition for our country’s independence. We can not depend on the good disposition of Europe, or the investment firms. We owe it to our children not to burden them with debts.

Mr. Vettas stressed that fiscal stability does not mean closing the tap, stressing that in this case our country will collapse: “Every euro that enters and every euro that comes out of public funds must be sacred and valuable.”

“A country can have strong growth without creating large deficits,” he said, adding that benefits (subsidies) are needed in times of crisis, but that can not go very far.

Inflation

Asked about the scenarios being examined by the the Foundation for Economic & Industrial Research regarding the prospects of the European and Greek economy, Mr. Vettas said that even if the problem persists, the turmoil in the markets, whether it concerns energy or goods, will increase inflation by more than twice what we had initially estimated.