ATHENS: Plans for a Greek euro exit "cannot be excluded," former prime minister Lucas Papademos said in an interview, warning that such a move could even affect countries outside the eurozone. "Although such a scenario is unlikely to materialise and it is not desirable either for Greece or for other countries, it cannot be excluded that preparations are being made to contain the potential consequences of a Greek euro exit," Papademos told the Wall Street Journal. A Greek exit would have "catastrophic" economic consequences, the former European Central Bank deputy chief said, speaking for the first time since handing over to a caretaker administration last week. Papademos cited estimates that the overall cost of a Greek exit could range from 500 billion to one trillion euros ($640 billion to $1.3 trillion) including the impact on market valuations, cross-border contagion effects and damage to the real economy. "Some calculations I have seen suggest that inflation could accelerate to 30% or even to 50%, depending on the impact of such developments on inflation expectations and on the strength of the second-round effects of price increases on wages," he said. Greece is heading for a general election on June 17, its second after an inconclusive ballot on May 6 that witnessed an anti-austerity backlash by voters. The radical leftist Syriza party, which wants to tear up Greece's unpopular EU-IMF bailout deal, came second on May 6 and is expected to win the next polls. European leaders have warned that Greece cannot hope to continue drawing international loans if the new government reneges on pledged reforms.

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