Greek Prime Minister Alexis Tsipras will meet with German Chancellor Angela Merkel on Monday, for the second time in five days, at the start of a week that may prove decisive for Greece’s future in the euro area.
The meeting in Berlin with the leader of the biggest contributor to Greece’s stalled 240 billion-euro ($259 billion) bailout is a precursor to make-or-break decisions Tsipras faces as his country’s financial predicament becomes ever more perilous. His government needs to spell out economic measures it plans to undertake as early as this week to unlock long-withheld aid payments that will keep the country afloat.
[CAD:FXAcademy CTA #75]“I hope there’ll be a U-turn on policies in Athens, but I maintain my view that if not, the Greek economy will collapse and they’ll slip out of the euro zone into chaos,” said Erik Nielsen, global chief economist at UniCredit AG. “The Greek government ought to recognize that this is ‘endgame stuff.’’
In the meantime, analysts believe that Greece will remain in the euro zone as long as Athens is willing to compromise, the former president of the European Commission told CNBC.
"I believe we should be flexible with Greece, but Greece has to respect the need to pursue with reforms, to be competitive, and if that's the case, I have no doubt that all the other governments in Europe want to support Greece," Jose Manuel Barroso told CNBC at the 18th annual Credit Suisse Asian Investment Conference in Hong Kong. "The government also should accept and respect the Greek people who elected them – and a huge majority of them want to remain in the euro area," he said.