Greece Eurozone Exit Would Be Felt Worldwide
May 31, 2012
Greeks head to the polls again later this month to cast votes for a new government that could ultimately decide whether Greece remains in the eurozone. The parliamentary elections, the second in as many months, became necessary after the country's fractured political parties were unable to form a working coalition. European member states, once fearful of panicking financial markets, have begun making contingency plans for a possible Greek exit. But at what cost? Despite its small size, what happens in Greece could have an oversized impact on the global economy.
With a population just under 11 million, and an annual GDP of about $300 billion, Greece is ranked 41st in a list of the world's industrialized countries. But with a sovereign debt nearly double its annual output, Greece is one of the weakest links in what has become a protracted European crisis.
Simon Johnson is an economist at the Peterson Institute for International Economics.
"The European Union is more than a quarter of the world's output and they have brought upon themselves and mismanaged a very serious crisis, so I'm afraid the implications for many countries are going to be quite dire," said Johnson.
Many see Greek elections in June as a referendum on the tough austerity measures demanded by the European Union in exchange for bailouts. But it's a referendum that could result in Greece becoming the first to leave the eurozone.
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