Confidence in economy grows
But there is a wide gap between optimistic businesspeople and still gloomy consumers
Two widely used indicators about managers’ and consumers’ expectations have reached heights not seen in many months, although a local think tank that compiles them warns that such sentiments could prove ephemeral.
The so-called economic climate index compiled from surveys by the Foundation for Economic and Industrial Research (IOBE) is at a 16-month high, while the consumer confidence index is at a 24-month high, although Greek consumers remain among the European Union’s gloomiest. The improvement in the two indices is closely related to a sense of political stability confirmed in the last two elections fought close to one another last May and June. Also, despite the problems publicized in the media, the rush of tourists has positively impacted incomes. IOBE notes, however, that “significant challenges remain on many economic fronts.”
“At the same time, one cannot exclude imported crises and disruptions, especially in Europe, and it is crucial for the country to face them from the strongest possible position,” IOBE adds. The economy’s course will be set by the newly re-elected conservative government’s priorities, the think tank’s report notes.
While the economic climate index improved to 111.1 in July from 110.1 in June – a number above 100 reflects confidence in the economy – the sentiments were far from uniform. Businesspeople’s expectations rose in retail and services and dropped in industry and construction. The industry’s confidence index, at 108.6 in June, dropped to 104.6 in July. In construction, the respective index dropped only marginally, to 132 in June from 132.2 in July, but the level of confidence is much higher than in July 2022, when the index stood at 94.4.
And even a sub-index such as construction hides a more complex reality: There are somewhat diminished expectations about private sector construction, but rising confidence that big public projects, some aided by the EU’s Recovery and Resilience Fund, will go ahead.
In retail, the index rose to 117.7 in July from 115.9 in June, while in services, it went up to 119.6 in July from 113 in June.
By contrast, the consumer confidence index, even at a two-year high, is underwater: It improved to -28.6 in July from -31 in June. Nearly six out of 10 consumers (59%) say they are barely getting by.
