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MSU prof says Greek financial crisis should not have big effect on Michigan economy

Jun 30, 2015

A Michigan State University economist says a looming loan default by Greece should not greatly affect Michigan’s economy.

Greece and its European creditors will be discussing a last-minute proposal by Athens for a new two-year rescue deal.

Credit Steve Carmody / Michigan Radio

The proposal came just hours before the country's international bailout expires – at which point it will lose access to billions of dollars in European funding.

At midnight, Greece is also set to become the first developed nation not to pay its debts to the International Monetary Fund on time.

The prime minister's office said the deal would "fully cover" his country's fiscal needs, while including a restructuring of debt. And he says his government "until the end will seek a viable solution within the euro."

Charles Ballard is an economist at Michigan State University. 

He says the turmoil in Greece and the potential multi-billion dollar loan default in Puerto Rico should not have a noticeable effect on Michigan’s economy.   

“Only if there is some bigger effect on the global financial markets that it would be expected to have a big problem for Michigan,” says Ballard.

Ballard predicts the expected interest rate increase from the Federal Reserve will have greater effect on Michigan’s economy.  

That increase is expected later this year or early next year.