In a research note published Friday, Citi said it now believes there is a 60 percent chance of Greece exiting the single currency bloc in the next 12 to 18 months, down from a previous estimate of a 90 percent chance.
The slightly more optimistic tone in Citi’s outlook is “mainly due to a change in the attitude of euro core members towards it (a Greek exit).”
“Politicians probably fear its negative effects on upcoming elections (in Germany) and a diminished economic resilience in the rest of Europe to a shock like Grexit,” Buiter wrote. “The recent more cooperative Greek stance, together with some timid improvements in the deficit data, may also have helped.”
However, Citi still sees a "Grexit" as inevitable.
“Unless a write-off of official debt is agreed upon -- quite unlikely, in our view -- we think a stalemate between Greece and its international creditors will eventually lead to a withdrawal of international support, leaving Grexit as potentially the only available solution for Greece,” Buiter wrote.