If Greece leaves the euro area, living standard will crash, incomes will decrease by half, and inflation and unemployment will sharply skyrocket. This gloomy forecast is made by the National Bank of Greece, which examine what would be the consequences of the return of the former national currency Drachma (replaced by the euro in 2001.)
On exit from the euro area the income per capita will fall by 55%, the Drachma will be had with 65% against the euro, and the GDP will shrink by 22%. The Bank forecast growth of unemployment to 34%.
The Greek State will not be able to finance itself and will resort to printing money thus triggering chain reaction of inflation. Experts expect inflation to reach 30% by maintaining ascending trend for a long time.
In case of GREXIT (term for the exit of Greece from the euro area), the country will not have access to global financial markets and will not be able to fulfill its obligations towards its creditors, owed to 325 billion Euros.
The study of National Bank of Greece warns the potential cessation of payments on the debt will have also exclusively unfavorable consequences for international relations of Greece, as well as for Greek businessmen, who develop their activity abroad. Citizens will not have access to fuel, medicines and other goods of prime necessity.
Experts forewarn that these conclusions apply only in the case of a smooth and peaceful transition to drachma. In the event of unregulated bankruptcy of Greece, the consequences will be even more dramatic.
Meanwhile, the opinion polls show that the majority of Greeks want their country to remain in euro zone. At the same time 77, 8% of the Greeks are for the correction of the memorandum for savings and 66, 4% share that they prefer coalition Government after the new elections on 17 June, 2012. However, senior officials in the EU noted that if the next Greek Government throws back the survival plan, the country will not receive further financial assistance, which would help it to avoid bankruptcy and to stay in the euro area.
Greece’s political parties were not able to form a coalition government on May following voters’ rejection of austerity measures insisted upon by the European Union and the IMF, so the country will repeat the parliamentary elections in June.
According to sociological predictions, the radical left coalition SIRIZA would receive the majority of votes at the new scheduled at the parliamentary elections. The second and third political forces-the conservative party New Democracy and the Socialists from PASOK are expected to be ranked on second and third place. The big question is whether the pro-bailout parties would be able to establish a coalition government; otherwise Greece may be forced to leave the euro area.