Analysts give 20 pct chance Greece will need bailout
By Jonathan Cable
LONDON (Reuters) - Analysts see a one in five chance that Greece will seek a financial bailout and say Ireland, Spain and Portugal are the economies most likely to suffer a similar setback in investor confidence, a Reuters poll found.
Greece fell into its first recession in 16 years in 2009 and is set to become the euro zone's most indebted member this year, with debt estimated at more than 120 percent of gross domestic product (GDP), despite plans to cut expenditure and hike taxes.
The country launched an ambitious three-year plan on Thursday to slash its budget deficit with defense and hospital spending curbs and pay freezes, designed to boost its credibility, but markets continued to punish Athens.
"Greece has a problem of credibility in terms of implementation of the plans. We have a history of very ambitious plans not implemented," said BNP Paribas analyst Luigi Speranza.
The plan to shrink the soaring budget deficit to 2.8 percent of GDP in 2012 did little to convince markets of Greece's ability to resolve a fiscal crisis that has prompted some economists to question its euro zone membership.
But ECB President Jean-Claude Trichet on Thursday dismissed the idea that Greece would leave the euro zone as 'absurd'.
The 16-nation bloc's economy returned to growth in the third quarter of last year, having shrunk for the previous five consecutive quarters in the worst downturn since the Second World War, but some of the member states which had prospered most from membership are still languishing in recession.
Greek Finance Minister George Papaconstantinou said last week during a visit by European Union and European Central Bank officials that there was no prospect of the country needing a bailout. Continued...