A National Bank of Greece report painted on Tuesday a dramatic picture of the country should it decide to exit the eurozone, less than three weeks before the new general election, while on Wednesday the European Commission is set to recommend the full and uninterrupted implementation of the bailout agreement during the presentation of its reports for individual member states.
The NBG report suggests that the average annual income of each Greek citizen would shrink by no less than 55 percent, with a similar decline in the value of real estate and bank deposits. Per capita income would shrink from 19,400 euros per annum today to just 8,700 euros, which would be lower than that in Croatia, Poland or Latvia.
The country’s gross domestic product would drop by at least 22 percent and the jobless rate would soar to 34 percent, mostly hurting young people, women and low-skilled workers.
Moreover, inflation would jump to 32 percent, with lending rates reaching up to 37 percent while the new national currency would be devalued by up to 65 percent.
The report stresses that an exit from the common currency “does not constitute a case study anymore or a development with a minimal possibility.”
It adds that the atmosphere is so “flammable” that dropping out of the eurozone could even happen due to “improper handling.” In this context the analysts of the country’s biggest bank say that “a stop in funding amounts to immediate default.”
They also suggest that in such a case Greece would require another debt restructuring by 80 percent, with its debt being then in a foreign currency (mostly in euros). The ratio of nonperforming loans to deposits would exceed 33.3 percent.
Finally, the report says, there would be extreme phenomena of uncertainty, social unrest and panic in the economy during the transition to the national currency, while most Greek companies -- especially outward-looking ones -- would face serious problems in the process.
Meanwhile, Brussels is set to confirm on Wednesday that it is freezing Greece’s fiscal adjustment program until a new government to apply it is formed in Athens.