The global economy will face the same risks in 2027 as it does this year, Bank of Greece Governor Yiannis Stournaras, said at the Istanbul Economic Forum, held on 8 and 9 October at the Istanbul Financial Centre (İFM) and organised by the Central Bank of the Republic of Türkiye (TCMB). The forum brought together central bank governors and senior policymakers from around the world.
In particular, he said supply and demand disruptions, fiscal difficulties in some countries and tariffs could pose problems next year.
At the forum, the Bank of Greece governor spoke to an Anadolu Agency correspondent and assessed developments in the global economy and the euro area.
The Greek central banker stressed that inflation is currently high, saying:
“Inflation is relatively high, well above our target. The target for the euro area is 2%, while the latest available data put inflation at 3.8%. So we need to bring inflation down”.
“I believe it is essential to keep inflation expectations in the euro area under control”.
Mr Stournaras noted that interest rates had risen gradually, saying:
“This helped bring inflation down without causing problems for banks — that is, without creating challenges for financial stability or leading to a recession. I believe we will do the same now”.
He also said supply-side disruptions posed a challenge for central banks, as central banks and monetary policy are better suited to addressing problems that stem from the demand side.
Stressing that he believed inflation expectations in the euro area needed to be kept under control, he added:
“For now, it seems we have managed to do so, thanks to the credibility of the European Central Bank (ECB), built through great efforts over many years. For that reason, I would say the main task at this point is to keep expectations under control until overall inflation also comes down, and to ensure they remain stable at around 2% over the medium term”.
“I firmly believe in economic cooperation, not trade restrictions”.
The Bank of Greece governor stressed that artificial intelligence was particularly important for the labour market.
Asked about the widely debated question of whether artificial intelligence would replace human labour or complement it, Mr Stournaras said:
“We hope the latter prevails: that artificial intelligence complements human labour rather than replacing it to a large extent”.
Mr Stournaras stressed that strong institutions were needed to protect people from the negative effects of artificial intelligence, and concluded:
“Let us preserve the positive aspects of artificial intelligence and create mechanisms to offset its negative effects. I firmly believe in economic cooperation, not trade restrictions. Imagine if tariffs were eliminated around the world right now, and geopolitical conflicts ended at the same time, ushering in a new era of economic cooperation. You cannot even imagine how much prosperity for everyone on our planet would increase”.