Study finds businesspeople upbeat, consumers gloomy
Business sentiment continues to improve in Greece, although it still lags behind the EU average, according to research published yesterday by the Foundation for Economic and Industrial Research (IOBE). The same data showed that, by contrast, consumer sentiment keeps declining because consumers foresee a downturn in their, and the country’s, finances. The Business Sentiment Index continues a climb which started in mid-2005, reaching 98.5 in March from 94.5 in February. The improvement was especially marked in retail commerce, construction and industry, but slower in services. In the European Union, the average BSI rose for a fourth consecutive month, to 104.9 points in March from 104.1 points in February. Consumer sentiment declined marginally. An above-average increase in the BSI took place in Slovakia, Greece, Latvia, Cyprus, Spain and Austria, while the increase was below average in the Netherlands, Ireland and Slovenia. By contrast, the BSI declined in Lithuania, Estonia and Finland. Greek construction businessmen appeared particularly upbeat, following two years of stagnation. About 40 percent think employment in the sector will rise, a confidence probably based on hopes that public-private partnerships will lead to more public infrastructure projects being implemented. In retail commerce, the sentiment sub-index rose steeply for a second month in a row, based on expectations of higher sales. It now stands at its highest level in the last five years. Sentiment is especially buoyant in the foods, beverages and tobacco sector, with the sub-index at 120.2, marginally lower than in February but much higher than in March 2005 (104.2). In this sector, 71 percent of businesses expect higher sales. By contrast, service firms appear guardedly optimistic regarding future prospects. The Consumer Confidence Index declined by two points in March, the IOBE study showed. According to the study, the decline was the result of consumers’ downbeat forecasts about their personal finances as well as the Greek economy’s prospects. By contrast, there was a marginal rise in optimism regarding the level of savings over the next 12 months, although from a low base. Finally, there has been no change in the feeling that unemployment is going to rise. Specifically, households’ expectations concerning their financial situation over the next 12 months have worsened further: the negative sentiment – measured by the difference between positive and negative responses (in percentages) – reached -27 in March from -21 in February. Consumers’ forecasts about the Greek economy’s prospects over the next year also worsened: the negative sentiment reached -30, the worst figure among the 25 EU members. A marginal improvement in savings forecasts took place in March, but the overall negative sentiment remained very high at -47, much higher than in the EU (-9) and the eurozone (-11). Finally, the negative sentiment regarding unemployment remained steady at -48, the worst value among EU members.
