16 November 2015
Greek Crisis: Implications for Asia and Europe
Executive Summary
This report covers the S. Rajaratnam School of International Studies (RSIS) conference on the Greek economic crisis, and its potential wider effects on the rest of Europe and Asia. The Greek crisis first hit the headlines in 2009. Five years on and after two bailouts, amounting to billions of dollars, the Greek crisis is once again back in the news. On 1 July 2015, Greece became the first developed country to default on a loan from the International Monetary Fund (IMF). The aims of this seminar were to discuss what the causes of the crisis were, as well as the possible implications for Europe and Asia. Four distinguished speakers provided their views on the situation on top of offering recommendations on how Singapore could prepare for potential damaging effects reaching its shores.
Dr Joergen Moeller, Singapore Management University and Copenhagen Business School, explained how Greece’s current woes stem from its political system which has been established over time. This has led to a sheltered and non-competitive economy that is heavily indebted, resulting in negative effects on the rest of Europe.
Associate Professor Pradumna B. Rana, RSIS, noted that the implications for Asia could be contained partly because of the lessons learned from the Asian experience during the Asian financial crisis. Asia is not overly dependent on the eurozone and hence, the effects should be manageable. However, if the crisis led to the collapse of the eurozone, the damage would be far more significant.
The Government of Singapore also has a vested interest in Greece as the sovereign wealth fund (GIC) has its portfolio invested across the globe. Dr Ong Li Lian, Vice President of Economics and Investment Strategy at GIC, noted that the portfolio is not heavily exposed to Greece but has 14 per cent of the portfolio invested in the eurozone, so the damage would be dependent on how much the contagion effect spreads. However, the risks should still be mitigated and planned for.
Greece has been involved in a strategy of brinkmanship in their negotiations with the Troika to gain more leverage to achieve better bail-out packages according to Professor Pascal Vennesson, RSIS. This has created an atmosphere of mistrust among many of the eurozone members, making a future relationship of trust between Greece and the markets unlikely.
Executive Summary
This report covers the S. Rajaratnam School of International Studies (RSIS) conference on the Greek economic crisis, and its potential wider effects on the rest of Europe and Asia. The Greek crisis first hit the headlines in 2009. Five years on and after two bailouts, amounting to billions of dollars, the Greek crisis is once again back in the news. On 1 July 2015, Greece became the first developed country to default on a loan from the International Monetary Fund (IMF). The aims of this seminar were to discuss what the causes of the crisis were, as well as the possible implications for Europe and Asia. Four distinguished speakers provided their views on the situation on top of offering recommendations on how Singapore could prepare for potential damaging effects reaching its shores.
Dr Joergen Moeller, Singapore Management University and Copenhagen Business School, explained how Greece’s current woes stem from its political system which has been established over time. This has led to a sheltered and non-competitive economy that is heavily indebted, resulting in negative effects on the rest of Europe.
Associate Professor Pradumna B. Rana, RSIS, noted that the implications for Asia could be contained partly because of the lessons learned from the Asian experience during the Asian financial crisis. Asia is not overly dependent on the eurozone and hence, the effects should be manageable. However, if the crisis led to the collapse of the eurozone, the damage would be far more significant.
The Government of Singapore also has a vested interest in Greece as the sovereign wealth fund (GIC) has its portfolio invested across the globe. Dr Ong Li Lian, Vice President of Economics and Investment Strategy at GIC, noted that the portfolio is not heavily exposed to Greece but has 14 per cent of the portfolio invested in the eurozone, so the damage would be dependent on how much the contagion effect spreads. However, the risks should still be mitigated and planned for.
Greece has been involved in a strategy of brinkmanship in their negotiations with the Troika to gain more leverage to achieve better bail-out packages according to Professor Pascal Vennesson, RSIS. This has created an atmosphere of mistrust among many of the eurozone members, making a future relationship of trust between Greece and the markets unlikely.
