A Greek departure from the euro currency, followed by other southern European countries, would cut 17 trillion euros ($22 trillion) from global economic growth, causing a worldwide recession hitting the U.S. and China, a study by a German think tank has found.
Commissioned by the Bertelsmann foundation, the study by Prognos looks at four scenarios in which Greece defaults on its debts as creditor nations grow tired of providing financial aid to other euro zone countries.
In the worst case scenario the bailout money from the European Central Bank would simply "dry up." An exit for Greece, Spain, Italy, and Portugal would follow, provoking a worldwide recession causing a gross domestic product (GDP) decline of nearly 17.2 trillion euros in 42 developed countries in the lead-up to 2020.
"In terms of absolute figures, the declines would be the greatest in France (2.9 trillion euros), the U.S. (2.8 trillion euros), China (1.9 trillion euros), and Germany (around 1.7 trillion euros), " the study said.
Many analysts have speculated on when not if Greece would leave the single currency, but German Chancellor Angela Merkel, ECB Chief Mario Draghi , and Eurogroup President Jean-Claude Juncker have continuously pledged their support for the country in recent months.
"Apart from the severe economic consequences of such a recession, it would also put major strains on the social fabric and political stability of a number of states, " the report said.
"Particularly those that leave the European Monetary Union, but other states would feel these strains, as well, " Prognos said, although conceding that the consequences of a Greek default and exit are in practical terms "shrouded in mystery."
Investment bank Macquarie Economics does not foresee the same cut in global GDP that Prognos does, but it predicts that in the next eight years the world will see "egregious" fiscal tightening.
"The global economy as a whole is going to go through a very extended period of fiscal tightening, which means it's a simple mix of very loose monetary policy and very tight fiscal policy for a very long period of time here, " Daniel McCormack, head of European and U.K. economics told CNBC Thursday.
McCormack believes that Europe may be in a slightly better position for fiscal adjustment, but said the figures for the area mask some large internal divergences that create their own issues and risks.
"By our estimates the major advanced economies of the world — the U.S., U.K., euro area, and Japan — will tighten fiscal policy by, roughly speaking, 1 percent of GDP per year, for each and every of the next five to eight years, " he said in a research note.