Filippo Taddei (Goldman Sachs): “Tax cuts need caution”

The question that plagues governments, analysts and citizens is when the war in Ukraine will end. The loss of income and savings can not yet be calculated, with the financial staff preparing for all contingencies. The main concern lies in the magnitude of GDP contraction, on the one hand and the degree of fiscal derailment on the other.

Filippo Taddei, CEO of Goldman Sachs, Global Investment Research spoke to “NEA” newspaper about the prospects of the Greek economy in the light of new data.

According to Mr. Taddei, even before the invasion, the large energy and metal markets were already in deficit. He emphasizes that it is particularly important for an economy like Greece, which was preparing to start a multi-year investment cycle, strengthened by European fiscal support. He notes that in order to build new capital and transform the structure of the economy, a country needs goods, energy and critical raw materials that are in danger of being further disrupted by the war.

Greece, he comments, focused on the recovery in 2022 from a position of power, having a large growth margin and the 5-year support from the Recovery Fund, which can reach up to 18% of GDP. It is important for our country to stay on this path, although the increase in energy and commodity costs will bring delays, but it is up to each country to avoid derailment.

Fiscal measures and structural reforms

According to Mr. Taddei, Greece is called upon to maintain the positive momentum that exists for investments, through a successful combination of fiscal measures and structural reforms. He acknowledges, however, that fiscal measures are costly and points to the risk that both the Greek government and others in the European Union will take more action than is needed.

If Greece manages to meet this challenge, it believes that it will emerge stronger and will be strengthened as an investment destination.

“The Greek government, like other EU member states, is facing the challenge of doing enough, while risking doing too much. “Navigation in these times, if successful, can offer Greece an even stronger position to become an attractive investment destination,” Taddei said.

He made special reference to inflation, noting that it is expected to reach 9% between July and August in the euro area. “We anticipate,” he says, “that the level will remain well above the ECB’s target by early 2023.”