The European nation is in danger of not meeting today’s deadline for €1.5 billion in interest payments to the International Monetary Fund, with it requiring further bailouts from the EU to meet those obligations.
The EU has currently offered Greece €16 billion in further bailout loans, however to receive the loans the Greek government must undertake fiscal reform including committing to budget surpluses and further austerity measures such as cuts to pensions.
A referendum on whether to accept the loan and their conditions is set down for 5 July, but the current government is campaigning for a “no” vote, claiming the measures will force the country into depression.
If the “no” vote returns a majority at the referendum, the Greek government would be forced supply banks with the nation’s traditional currency of drachmas to keep them from collapsing and would essentially exit the EU.
While share markets around the world have been hit hard by the situation, BIS Shrapnel senior economist Angie Zigomanis believes property owners in Australia have little to worry about.
“It won’t directly impact property prices, but it could have the potential to indirectly impact us,” Zigomanis said.
“It won’t cause interest rates to go up, in fact it could seem the Reserve Bank lower them if it feels it needs to improve conditions like consumer confidence,” he said.
“But if that’s the case, that would mean that it has affected consumer confidence.”
Zigomanis said any possible effect on the Australian economy would be seen overseas first, giving people the opportunity to prepare.
“It would be a six-degrees of separation kind of effect.
“It would have an effect on Europe, that might affect America, and as the biggest importer of Chinese goods, China might be affected and then it might start impacting us.”
Investors should also have little concern that the situation in Greece could trigger another global financial crisis.
The risk of a contagion if Greece defaults like that seen in the Global Financial Crisis where financial institutions stopped lending to each other... resulting in a freezing up of global lending markets is very low,” AMP Capital chief economist Shane Oliver said.
