Econ­o­mists play down new Grexit fears

Financial Mirror (Cyprus) - - FRONT PAGE -

Fol­low­ing Alexis Tsipras’ vic­tory in the Greek gen­eral elec­tions, the de­bate sur­round­ing a po­ten­tial exit from the Eu­ro­zone is not ex­pected to rear its head for the time be­ing. EurAc­tiv Ger­many re­ports.

“A Grexit is still on the ta­ble,” said Com­merzbank’s chief economist Jörg Krämer on Mon­day. “No mat­ter who is in power, the room for ma­noeu­vre is lim­ited,” said Nordea’s Euro­pean chief economist, Hol­ger Sandte. “For the fi­nan­cial mar­kets based out­side of Greece, the whole mat­ter is rather dull.”

Thomas Gitzel, chief economist at VP Bank, sus­pects that in Brus­sels, the in­sti­tu­tions breathed a sigh of re­lief, be­cause, “the EU would pre­fer to seek re­forms with Tsipras, rather than against Tsipras.”

Tsipras has had to grap­ple with Eu­ro­zone rep­re­sen­ta­tives over the terms of the third bailout deal and had hoped for post-elec­tion mo­men­tum. The Syriza leader had been un­der con­stant pres­sure to se­cure the much-needed EUR 86 bln in aid to stave off state bank­ruptcy.

His res­ig­na­tion af­ter the pack­age had been agreed upon also served to help ex­pel op­po­nents in his own ranks.

“The new Greek gov­ern­ment will i mple­ment the re­forms that have been agreed, but not as quickly as has been seen in the past years,” Krämer pre­dicted. Con­flicts with cred­i­tors are en­tirely ex­pected. There is the pos­si­bil­ity that the Greek cri­sis could come to the boil once again.

Cred­i­tor pa­tience seems to know no lim­its though. “The fi­nan­cial mar­kets know that and should as a re­sult not be swayed by the up­com­ing skir­mishes be­tween Greece and the in­ter­na­tional com­mu­nity,” said Krämer.

His col­league at Nordea in­sisted that the re­form pro­gramme agreed upon be­tween Greece and her cred­i­tors must now be im­ple­mented. “The trick­i­est as­pects of the deal in­clude re­cap­i­tal­i­sa­tion of the banks and debt re­lief, which will only be achieved if Greece moves for­ward with the re­forms.”

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