BoG Gov. Stournaras: Businesses in Greece should reduce recently widened profit margins

Businesses in the country should cut profit margins, which have widened significantly, Bank of Greece (BoG) Gov. Yannis Stournaras told CGTN and reporter Juliet Mann, in an interview broadcast over the weekend on the media site’s platform.

Stournaras, a former finance minister in the country – during a portion of the memorandum bailout era, no less – and a member of the European Central Bank’s governing council, noted that the rate of price increases in Greece is currently far greater than the rate of salary hikes, or even the rate of cost increases.

In his comments to the channel, one of six operated by the China Global Television Network, which itself is controlled by China state broadcaster China Central Television (CCTV), Stournaras dismissed arguments along the lines of creating a “safety surplus” of safety for the future, saying such a policy will simply reinforce stagflation.

This risk, as he warned, will generate inflation through a spiral of salary and price hikes, but accompanied by a drop in production and GDP growth.

As such, he said the goal should be for wage increases not to exceed the sum of the ongoing inflation rate – plus the rate of productivity growth. Secondly, he called on specific sectors to reduce profit margins.

Asked about Greek-Sino trade relations, Stournaras said Chinese exports to Greece account for roughly 8 percent of the east Mediterranean country’s total imports.

Conversely, Greece exports services to the vast Chinese economy, the vast majority being sea transport services.

Queried over the prospect of more direct Chinese investments in the country, he said they were welcome, as long as international rules were met.