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Country Risk Overview - Spring 2012

Country Risk Overview - Spring 2012
And if Greece were to quit the eurozone?

Greece quitting the eurozone would be disastrous. But this long unthinkable scenario cannot be discounted. Even though its likelihood remains below 50%, policymakers cannot afford to sweep it under the rug considering the severity of the Greek financial and economic crisis and the difficulty of implementing unavoidable reforms. This article draws lessons from the financial crises in Russia (1998) and Argentina (2001/2002) in exploring the likely advantages and disadvantages for Greece of withdrawing from the eurozone. What then would be the risk of propagation to the peripheral countries and the consequences for the eurozone as a whole?


Towards a new oil shock?

We foresee a $120 price per barrel of Brent in 2012. This reflects the severe constraints limiting the oil supply since the year began, the strong demand from emerging countries, and the heightened geopolitical uncertainties. In this article we consider several scenarios and analyse the effect on the world economy if prices surged beyond $120 per barrel. The global recession is likely to be triggered if prices soared above $200 a barrel but what would be the consequences if Brent prices surged to an intermediate $150 a barrel? And then, how would American, Japanese, European and emerging companies be affected?

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