Grexit No Longer Likely, Says Man Who Coined Phrase

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The economist who coined the term "Grexit" says the possibility of Greece exiting the euro zone has receded "markedly", reversing predictions he made in July when he saw a 90 percent chance of an exit within the next 12-18 months.

Citi Chief Economist Willem Buiter coined the phrase with his Citigroup colleague Ebrahim Rahbari in February 2012.

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"We still believe that there is a fairly high risk of Grexit in coming years, but no longer put it in our base case at any particular date," Citi said in a research note published on Wednesday co-authored by Buiter.

It said the improved stability of Greece's coalition government, combined with an upgrade in growth expectations in the euro area from -0.3 to 0.0 percent in 2014, had removed the shorter-term risk of a Grexit .

(Read More: Greece, Cyprus May Be Forced to Exit Euro: Citi)

"The chosen date was always somewhat arbitrary, but to construct a consistent forecast we penciled in sizeable Grexit-related uncertainties and financial strains around that date, hitting the 2014 growth outlook. That intensified headwind is now absent in our forecast."

Buiter's views differ somewhat from Rahbari's, who told CNBC earlier this month that the risks Greece faces have not changed much from where they were a year ago.

(Read More: Man Who Coined 'Grexit' Says Not Much Has Changed)

Rahbari said a "large part" of optimism over Greece has to do with markets discounting the risks posed by the country.

"Whenever markets see an abundance of liquidity and the need to make returns and wherever there is a justification not to see an immediate meltdown I think optimism prevails, I don't think there's a large degree of reflectiveness about Greece in the medium-term."

The bank expects European economic activity to contract further in the second half of 2013 which will prompt another ECB rate cut.

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"We expect that the ECB will cut the refi rate again later this year, but this will probably have little further effect given the low level of overnight rates."

By CNBC's Jenny Cosgrave;.Follow her on Twitter @jenny_cosgrave.