Greece Won't Exit the Euro, Economists Say
As Greece stumbles through a chaotic week after failed rescue talks — and toward a referendum on bailout terms — economists say it won't have to tear up its euro-membership card just yet.
More than three quarters of respondents to a Bloomberg survey on Tuesday say it will still be in the single currency at the end of 2015.
They also say that's the best option for the country: 69 percent forecast it would be worse off in five years if a Greek euro exit happened. The economy -- already battered by years of austerity and a confidence-eroding crisis -- fell back into recession in the first quarter.
"A 'no' vote does not mean automatic Grexit,'' said Achilleas Chrysostomou, an economist at Standard Chartered Bank in London, referring to the vote Prime Minister Alexis Tsipras has called for July 5. "No means zombie banks, IOU's, and eventually either a referendum for Grexit or a new government and renewed negotiations."
Greek banks have been closed for the past two days as part of government controls on money. While the plan is to reopen them on July 7, the survey says that's optimistic. Asked about the timing, 79 percent said the doors will stay shut next Monday. However, the same majority have them welcoming back customers by the end of July.
Two small positives: 75 percent forecast the turmoil in Greece may not have spillover effects to the rest of the euro-area economy. And economists also expect Greek depositors to avoid the fate of their Cypriot counterparts and won't be faced with a bail-in.
