Sources inform ''Globes'' that the Ministry of Finance, Bank of Israel, the National Economics Council, and the Israel Securities Authority will meet next Tuesday to discuss worst case scenarios for the eurozone. The discussion will be based on three scenarios prepared by the Ministry of Finance's new chief economist Dr. Michael Sarel, based on work by Dutch bank ING. "Globes" has obtained copies of these scenarios.
The meeting is intended to improve coordination and cooperation between the agencies and to draw up policy measures for each scenario.
Under the best-case crisis scenario, Greece and other countries will abandon the euro in an organized manner, Europe will enter a sharp recession, the value of the euro will fall 30%, the US will enter a mild recession, and US stock markets will fall by over 20%. As for Israel, exports will stagnate, GDP per capita growth will be around zero, the deficit will grow to 4% of GDP, and the debt-to-GDP ratio will rise to 75%.
Under the worst-case scenario, a disorganized break-up of the eurozone and a return to national currencies, European countries will collapse, the value of the euro will be halved, the US will enter a severe recession, and US stock markets will fall by over 40%. As for Israel, exports will fall by 8%, the economy will enter a recession, the deficit will grow to 6% of GDP, and the debt-to-GDP ratio will rise to 79%.
Published by Globes [online], Israel business news - www.globes-online.com - on August 16, 2012
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