Greek euro zone exit before end-2012 could cause short-term crisis in Russia - Sberbank
MOSCOW. May 23 (Interfax) - Russia could face a short-term financial crisis and 2% drop in GDP if Greece leaves the euro zone before the end of 2012, an expert at Sberbank said.
"The negative scenario, the early disintegration of the euro zone, would result in a short-term financial crisis in Russia, in capital outflow level with 2011, and GDP decline of 2% for a year after the crisis. The ruble could weaken to 39 rubles against the basket of currencies," Andrei Sinyakov of the bank's Macroeconomic Research Center told a briefing.
The Center's director, Ksenia Yudayeva, said that disintegration in this case stood for a Greece exit.
Sberbank thinks capital outflow from Russia in the first year after euro zone disintegration might be $95 billion-$100 billion.
Moreover the preservation scenario is less likely than the disintegration scenario, Sinyakov said. He said "strong fiscal integration" is needed to keep the euro zone intact, and that the "ECB ought to raise its inflation target and act as lender of the last resort." "We aren't seeing this yet," he said.
Sberbank thinks the early disintegration scenario could play out in Q4 2012, and the later scenario a year later.
"The current turn of events suggests the early disintegration scenario is unfolding," Sinyakov said, mainly due to failure by countries to observing EU, IMF and ECB guidelines for budget deficits; the level of public debt in Greece and Portugal; high yields on Spanish bonds; and the heightening banking crisis on the euro zone's periphery. "Greece is the first candidate to violate the troika's guidelines, above all for the level of public debt by 2016, then Portugal," he said.
If the later disintegration scenario applies, Russian GDP might grow 2% in the first year and capital outflow could be $70 billion, Sberbank thinks.