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Greece will fail and will eventually leave the eurozone as the country is unlikely to obtain the government to continue the policy of restrictions agreed with international lenders, analysts from Capital Economics, said on Monday. They say the economy of Greece is in free fall, as its debt is extremely high and unsustainable, so that markets expect the country to withdraw from the monetary union.
Such notice shall make and economist Nouriel Roubini, who said the outcome of parliamentary elections in Greece will probably leave the country outside the euro zone next year. “Greece is in political chaos at a time when the crisis turned into despair. Party walked like a train that goes to bankruptcy and exit from the euro area,” says Nobel laureate.
According to him remaining in Greece in the euro area is now exposed to serious danger to infect the remaining periphery of the monetary union. Both major parties in Greece supported the Troika lenders to remain in the country in the eurozone – New Democracy and PASOK received only 33% of the vote, while the radical left and extreme right gathered 66%. Roubini notes that Greek election results are much more serious than the French, because for the first time will lead to chaos.
Greece’s exit from the euro area as the most likely scenario recently warned the rating agency Fich, under which it will lead to bankruptcy of the country and lower credit rating and other countries in the region.
Volte-face
In many European analyst result of yesterday’s elections in Greece has brought a complete reversal of the political scene. They note that today Monday will be one of the most difficult for German Chancellor Angela Merkel as she has lost support for Greece and France. Representatives from the market now dare to talk about “the end of an era” of the continent. Indicative of this example is the lead economist at Saxo Bank Stine Jacobsen, who commented on the elections in Europe, to mention frustrating outcome, not just a matter of surprise.
Market representatives noted that “angry Greeks voted the most critical of their country’s elections.” The processes are so critical that can cause re-ignition of the European debt crisis and create prerequisites again to challenge the future of Greece in the euro area.
International Monetary Fund (IMF) threatened to freeze disbursements from financial aid to Greece if no agreement is reached between the political parties in the country to impose new austerity measures the fund official said, quoted by Greek media. While creditors of Greece tend to wait until the establishment of a coalition government in the country, the Fund does not intend to change plans outside of arrangements with the previous Greek government. The representative of IMF has said that lenders Troika of the European Union, European Central Bank and the Fund will visit Greece to the formation of new government is ready to negotiate.
Foreign observers points out that currently the Greek politicians are “between Scylla and Charybdis.” On the one hand, they must at all costs to undertake measures to alleviate the harsh economy of the Greeks against the dominant social unrest in the country and, secondly, to implement new measures agreed with international lenders, since otherwise If leaving the eurozone would be categorically.
If Greece decides or chooses to leave the eurozone, the country will have to resort to other international partners. Probability Greece out of monetary union is expected to trigger a domino effect and lead to collapse or to declare independence in the euro area with all the consequences of this on economic and political stability throughout the monetary union.