Blanchard: Greek crisis cannot be ruled out

IMF’s chief economist Mr. Blanchard expressed hope that there will be an agreement with Greece, stressing that a Greek crisis cannot be ruled out, and is an event that could unsettle financial markets.

He added that a Greek exit from the eurozone would be particularly painful for the country, while at the same time, the rest of the eurozone is better placed to handle a Greek exit, as the protection walls that did not exist have now been put in place.

Note that in its April’15 World Economic Outlook, IMF expects 2015e GDP growth of 2.5% y-o-y accelerating further to 3.7% in 2016e.

In its October’14 WEO, IMF expected Greek GDP growth of 2.9% y-o-y in 2015e. 

The IMF also downgraded its forecast on Greece’s unemployment rate to 24.8% in 2015e (from 23.8%), while it now expects CPI to average -0.3% in 2015e vs -0.8% in its Oct’14 forecast.