Now in January 2015, fears have returned of a Grexit. ING senior economist Martin van Vliet explains.
In the January 2015 economic update video for eZonomics, van Vliet tells how the number of Google searches on the term “Grexit” this month surged – indicating the return of talk on the topic. Politics is reviving the fears, says van Vliet, with a snap parliamentary election scheduled in Greece for 25 January 2015.
This time it’s different
Van Vliet says circumstances have changed in several ways since 2012. An important development is that Greek public debt is now largely held by official creditors rather than private creditors and Europe has built firewalls such as the European Stability Mechanism and the European Central Bank’s Outright Monetary Transactions (OMT) program.
“But even if the direct effect is less detrimental, it would still open a can of worms: it would show that the euro is not irreversible,” he says.
“We attach little likelihood to a Grexit scenario. But at the same time it seems clear that the Greek political situation has injected fresh uncertainty into the Eurozone outlook.”