Data reveal impact of capital controls

The consequences of the capital controls on financial activity in Greece have started becoming clearer, according to the official macroeconomic data and economic indices that the Hellenic Federation of Enterprises (SEV) has used to show that despite the 1.1 percent growth in the first half, this year will signal a return to recession.

The economic sentiment index declined further in August, reaching 75.2 points, following the dramatic drop in July. This is the lowest point recorded since March 2009. Similarly, the Purchasing Managers Index (PMI) followed up July’s record drop with another very negative reading of 39.1 points, mainly due to the adverse operating conditions for enterprises and the lack of demand for new orders.

Business expectations in industry have also crumbled as in August their index declined to levels unseen since the second quarter of 2015.

In terms of employment, there was a negative balance between hirings and dismissals in July, with a deficit of 16,700 jobs against a surplus of 13,300 jobs in July 2014.

Loans issued to households and enterprises declined further, increasing the market’s credit crunch. The prevailing uncertainty has led many households to postpone loan repayments.

While there was only a moderate drop in retail sales (0.7 percent) in June, the decline is expected to have been bigger from July onward.

Consumer confidence slumped in July and August, while the Hellenic Confederation of Commerce and Enterprises (ESEE) estimates that retail sales shrank by 1.3 billion euros in the summer months of 2015, or 12.7 percent from last year.

Despite the unprecedented difficulties created by the capital controls, tourism has resisted the pressure, which may well contain the drop of retail sales in July and August.

In the first half of the year tourism revenues reached 4.1 billion euros, up 8.2 percent from 2014, while tourism arrivals amounted to 7.5 million visitors, a 20.8 percent increase compared to the first half of last year.