This year begins with a high degree of uncertainty for the international economic scene, with the focus being on the strategy of the new US President Donald Trump, according to the Head of Global G10 Foreign Exchange Strategy at Bank of America, Thanos Vamvakidis, who presented the Global Research 2025 Outlook Series.

USA

Geopolitical and economic conditions are shaping a new reality, particularly in the US and Europe, with each market facing a different challenge. In the US, analysts are concerned about the possibility of policies that could increase inflation. If the US continues to pursue expansionary policies without controlling inflation, markets could face unforeseen consequences.

EUROPE

In Europe, the situation is more complex. The structural problems of the economy remain unresolved, and the political will for deep reforms seems limited. Growth rates are lower than in the US, but there are hopes that pressures will lead to some positive developments. Traditionally, Europe has only moved on to reform when under pressure, and perhaps this year will see moves in that direction.

One of the issues expected to dominate is increased defence spending, with some countries discussing raising the relevant budget to 3% of GDP. Although defence spending has no direct impact on the wider economy, it could send a positive signal to markets.

The European Commission seems keen to support proposed reforms, such as those contained in the Draghi report, which aim to create a larger European budget. Although this project is politically difficult, its implementation could boost growth.

BETTER PICTURE FOR GREECE

Speaking about the picture in the Greek market, it was mentioned that our country presents a better picture than expected in recent years, especially compared to the period before the pandemic, both in terms of growth and its fiscal performance. Already in the last decade, it became apparent that the country needed political stability and structural reforms, which seem to have started to pay off. The expectation is that this positive trend will continue in the coming years.

THE BALANCE OF PAYMENTS DEFICIT

Nevertheless, Mr. Vamvakidis underlined that a chronic problem remains the balance of payments deficit, which persists despite the increase in growth rates. At the same time, the rise in investment, especially those financed by European funds, is a positive development. However, the question is what will happen when these resources are exhausted.

FOCUS ON PRODUCTIVE INVESTMENT

The possible scenarios for the future are, on the one hand, that investment will pay off, strengthen the productive base of the economy and help reduce the deficit, while on the other hand, when the flow of European funds stops, there is a risk that the resources supporting the economy will be reduced and the deficit will deteriorate again if investment is not efficient.

Therefore, Mr. Vamvakidis concluded, it is crucial that the available funds are used properly, directed towards productive investments that will have long-term benefits for the country. Moreover, the reforms currently underway must continue in order for Greece to create a stable economic environment.

Regarding how Greece would be affected by the possibility of high tariffs imposed by the Trump administration, Vamvakidis said that in a possible aggressive trade policy by the US, Greece would be indirectly affected. Our country is mainly based on services and if this scenario takes effect, there will be consequences due to the impact on Europe and to some extent on China.