As Greece goes to fresh parliamentary elections on Sunday, whose results will hold sway on whether it would stay in or exit from the euro area, the European and world economies are facing uncertainties and trials.

Though all sides at this moment hope Greece would stay in the eurozone, analysts said that the chances of an exit were increasing as the political and economic crises in Greece were in downward spiral. Therefore, it is better for the world to take precautions.

In or out is a question for Greece

According to the latest opinion polls, the pro-bailout New Democracy party stands neck-and-neck with the anti-bailout Radical Left Coalition (Syriza) party for the first place. Syriza leader Alexis Tsipras warned Tuesday that if his party wins the election, the EU aid agreement will be immediately abolished. Once this happens, Greece is most likely to be forced to exit from the eurozone.

The National Bank of Greece has predicted a doomsday scenario for the economy after a Greek exit: economic contraction of up to 22 percent, unemployment rate of 34 percent, a drop of per capita income by 55 percent and inflation of 30 percent.

However, Martin Feldstein, a Harvard University professor, said that Greece should choose to exit from the eurozone as it is the only way to revive its economy.

He explained that Greece could take advantage of currency devaluation to gain possible economic growth after a short-term chaos caused by the exit.

In any case, ordinary Greeks, who have seen their lives change dramatically over the past two years due to cutbacks on salaries and pensions, tax increases, unemployment and uncertainty, feel that they are asked to choose between the bad and the worse.8 No matter which party they will vote for, they fear that they will be faced with more instability and tougher times, within or outside the eurozone.

Eurozone and world economy face trials

Andre Sapir, an economic advisor of European Commission President Jose Manuel Barroso, said the direct costs of Greece's exit would reach 400 billion euros, while the indirect ones are more worrying.

The financing costs of Portugal, Spain, Italy, Ireland and other peripheral eurozone countries would probably rise further, one or two of them could even follow Greece's step.

Furthermore, as the eurozone banking holds 1.2 trillion government loans of the four above-mentioned countries, once the situation deteriorates, a comprehensive crisis will erupt in the eurozone banking system.

Goldman Sachs predicted recently that if Greece exits disorderly from the eurozone, the economy of the whole area could contract 2 percentage points. If the eurozone falls apart, the contraction could approximate double digits, it warned.

On the other hand, if Greece exits orderly from the eurozone, the GDP of the whole region will drop by 1 percentage point or even lower on the condition of proper reactions.

Joseph Lupton, an economist from JP Morgan, said a Greek exit would impact world economy through trade, finance and confidence, and there could be 0.5 percentage points decline in the global economy.

The first victims are those European countries which have close economic ties with the eurozone, such as Hungary and the Czech Republic. Meanwhile, Russia and Middle East countries which rely on oil production, Australia and Brazil, which have large iron ore exports, will be considerably impacted too.

As to China, its exports would decline 3.9 percent this year if Greece exits from the eurozone, if not, its exports will still increase 10 percent, China International Capital Corporation said in its report.

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