Euro Crisis Could Severely Hamper NJ’s Economic Recovery

An upcoming election in Greece could affect that country’s membership in the Euro Zone. Director of the Center for European Studies at Rutgers University Daniel Kelemen told Senior Correspondent Desiree Taylor that while it’s possible Greece could leave the Euro Zone, he believes the euro and the European Union will remain intact.

Kelemen explained that there will be an election in Greece Sunday that could change the country’s status. “This is a repeat because they held an inconclusive election last month,” he said. “If the leftist party wins, there’s a good chance that Greece may be forced to exit the Euro Zone because the leader of that party is saying he will not obey the conditions of the bailout Greece has received from the other Euro Zone countries.”

Even if Greece leaves the Euro Zone, Kelemen is optimistic that the euro will remain intact. “I don’t think Greece leaving — even if it comes to that — would mean the breakup of the Euro Zone or the end of the euro overall. That won’t happen,” he said. “But what could happen is of course that panic will spread because once one domino falls, people want to know could there be another country that could leave? But I think actually the impact if Greece left would be it would finally push the Euro Zone to tackle some of their underlying problems to prevent that contagion from spreading.”

Locally, Kelemen said New Jerseyans should care about what happens in the Euro Zone and Europe in general because the 27 countries in the European Union, which contains 500 million people, is the biggest single economic block in the world and the biggest trading and investment partner in the U.S. and New Jersey.

Kelemen said there are a few effects from the New Jersey business perspective. “The European Union as a whole is the number one destination for exports from New Jersey and other U.S. states and so there’s that direct effect, but beyond that, if there is continued turmoil or if it even gets worse in Europe, then that’s going to lead the stock market to go down, that’s going to lead to consumers here in New Jersey and around the nation to feel less confidence because they’ll see their portfolios shrinking so that would depress demand here in the U.S. and will hurt business,” he said. “And I think more generally it’ll just effect the business confidence.”