Just under a month before the make-or-break elections on June 17, it is increasingly conceivable that Greece may leave the eurozone, leading other countries to brace themselves for the potential roll-on effects of the weakening of the eurozone.
Officials in Australia are watching the growing crisis.
The Treasurer, Wayne Swan, yesterday said that Europe was likely to face a ”long and painful adjustment”.
The Commonwealth Bank has put in place extensive contingency plans to deal with financial shocks that could follow if Greece leaves the eurozone.
While planning will help minimise financial pressure, the implications of a Greek exit would be “material”, warned the bank’s chief executive, Ian Narev.
Economists at a German bank recently estimated that a Greek exit would cost the German government about 100 billion euros ($127 billion), or less than one-tenth of 1 percent of the nation’s annual economic output.
Similarly, former French finance minister Francois Baroin said earlier this week that a Greek exit would cost Frςance up to 50 billion euros – only a small share of its economic output.
Meanwhile, stock markets have declined worldwide on fears that Europe will unravel, European banks have recorded losses on Greek investments, companies are making contingency plans and Europe has prepared rescue funds for other vulnerable nations like Portugal, Ireland and Spain to prevent the spread of the economic contagion.
