Greek Economic risk analysis

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This topic contains 2 replies, has 1 voice, and was last updated by  KP 1 year, 11 months ago.

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  • #210359

    KP
    Participant
    Aristotelic

    The Economist had an interesting risk analysis of Greece recently, with it’s associated impact on the EU……
    They are still cautious, as it could go either way, but a little bit of hope if the government and country in general stick to the agreement….. which probably means that hope has just gone out of the door, as I’m not so convinced that Greece can or will comply, or indeed has the will to! :-(
    <h1 id=”ctl00_PageContent_ArticleTitle”>Grexit remains on the cards</h1>

    In the past month the prospect of a Greek exit from the euro zone (“Grexit”) has risen considerably, following the repeated failure of negotiations between the left-wing Syriza coalition government and its European creditors. The deal reached in mid-July, which includes stricter measures on Greek public spending than have been proposed before, is likely to cool the fevered temperature in the euro zone in the short term, but the risk of Grexit in the medium term remains high. Greece’s creditors remain deeply suspicious about the ability of the government, led by the prime minister, Alexis Tsipras, to implement the spending cuts and fiscal reforms that they believe are required to justify a third bail-out. This is why the deal comes with a heavy price for Greece. It also means that the hard work is only just beginning for Mr Tsipras. He must convince Greece’s parliamentarians and the wider population that this deal is in the country’s interests if he is to survive in office long enough to implement it. The creditors will not tolerate any deviation from the plan. The scale of the demands, and the divisions already evident in the Greek government, lead us to believe that Grexit in the next five years is still more likely than not.

    Although Grexit would create another fault line in the euro zone in the medium term, The Economist Intelligence Unit is relatively sanguine about the immediate effects of potential Grexit (and the path to it) on the real European and global economies. This mostly relates to the strength of the rest of the euro zone in comparison with 2012‑13, which was when Grexit was last on the cards. Since then, fiscal positions have improved, firewalls have been erected, debt-repayment schedules have become more manageable and direct corporate and banking linkages between Greece and the rest of the euro zone have shrunk. Consequently, we have maintained our forecast for euro zone GDP growth in 2015. The likelihood of further volatility and the Greek government failing to implement its measures in full means that we have lowered euro zone GDP growth by 0.1% to 1.6% in 2016, reflecting diminished consumer and business confidence. We are also forecasting a slightly weaker euro against the dollar.

  • #210368

    KP
    Participant
    Aristotelic

    Shortly after the previous article in the Economist, they presented an interesting article titled ‘Russia to be a net benficiary of Greek crisis’!

    The article shown in full through the link below begins stating that they have now upgraded the risk of Greece leaving the Euro zone! So they think that it’s much more likely than ever now!  :good:

    “Following the events of June 27th-29th, we have revised up our estimate of the probability of a Greek exit from the euro zone. “Grexit” is now our base case for Greece, although it may still be avoided.”

    http://country.eiu.com/article.aspx?articleid=213295405&Country=Ukraine&topic=Politics&subtopic=Forecast&subsubtopic=International+relations

  • #210370

    KP
    Participant
    Aristotelic

    Ooops! I just noticed that was JUNE 29th, not JULY 29th as I thought…. so it is in fact written before the previous article! :wacko:

    Still very intersting though!

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