Grexit

Grexit Meaning

The term Grexit is a combination of Greece or greek with the word exit which means an exit of Greece from the eurozone or European union. The Grexit was cropped up due to Greece’s possible withdrawn from the eurozone. The term introduced by two famous economists of Citigroup Ebrahim Rahbari and Willem H. Buiter on February 6th, 2012 and which subsequently made headlines in media and major newspapers.

The Grexit is very critical for investors and others including economists who tried to study the impact of the financial crisis on the greek itself and the world economy. The term Grexit become popular as greek citizens proposed to leave the European Union and introduce local currency drachma as the official currency of Greece to ward off the country’s debt crisis.

Grexit

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Source: Grexit (wallstreetmojo.com)

Greece Timeline

Greece joined the eurozone in the year 2001 but the 2009 financial crisis left Greece as the epicenter of Europe’s debt problems. Greece started facing bankruptcy from 2010 which spread the fear of the second financial crisisFinancial CrisisThe term "financial crisis" refers to a situation in which the market's key financial assets experience a sharp decline in market value over a relatively short period of time, or when leading businesses are unable to pay their enormous debt, or when financing institutions face a liquidity crunch and are unable to return money to depositors, all of which cause panic in the capital markets and among investors.read more one after the other among the peer members. By then many members had already assumed exit of Greece from the eurozone and the term Grexit cropped up.

The aftermath of the 2009 financial crisis makes clear the extent to which Greece was exposed to financial terrible ordeal it was going through. In 2010 when Greece was heading towards bankruptcy Greece’s debt to GDP ratioDebt To GDP RatioThe debt to GDP ratio is a metric to compare a country's debt to its GDP and measures its capability to repay its debt. A country with a high ratio would not have difficulty repaying its debt but will not seek debt due to higher chances of defaulting.read more was exorbitantly high 146%. There were many factors that were the apple of discord for the Greece debt crisis.

Factors Behind the Grexit

Following are the main factors which lead to the Greece debt crisis:

Consequences of Grexit

The following are consequences of Grexit.

Impact of Grexit

Conclusion

In conclusion, we could say that Grexit had been envisaged as bad for Greece in the short as well as in the long run.

This has been a guide to what is Grexit and its meaning. Here we discuss the impact and factors behind the Grexit along with consequences and Greece’s timeline. You can learn more from the following articles on Economics –

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