Greek economic sentiment improves in September, IOBE says

The economic sentiment indicator is a composite index that captures business expectations in Manufacturing, Construction, Retail Trade and Services, as well as consumer confidence.

The increase in the indicator was driven mainly by improved expectations in Manufacturing and Services, while Construction and Retail Trade moved in the opposite direction. Consumer confidence also strengthened significantly, with households appearing more optimistic about both their own financial situation and the broader outlook for the Greek economy.

The survey presents a mixed picture, as the improvement in the overall indicator was not evenly distributed across individual sectors. The decline in Construction was particularly pronounced and was attributed exclusively to developments in public works, while Retail Trade recorded a marginal weakening in expectations.

Manufacturing: Slight Improvement in Orders and Demand

In Manufacturing, the balance of assessments regarding orders and current demand improved moderately. At the same time, the positive balance of production expectations for the coming months remained largely unchanged, while inventory levels increased slightly. This suggests that businesses in the sector continue to maintain relatively stable expectations for their production activity, with current demand showing a modest improvement.

Construction: Pressure from Public Works

Construction recorded a significant deterioration in business expectations. The decline was driven exclusively by the public works segment. Slightly positive expectations regarding companies’ work programmes weakened marginally, while the decline was more pronounced in positive employment expectations. This development represents one of the main negative elements of the survey, as it contrasts with the broader improvement in economic sentiment.

Retail Trade: Stronger Current Sales

In Retail Trade, businesses’ assessments of current sales improved significantly. However, the outlook for the coming months was considerably more cautious. Specifically, expectations for sales over the next three months declined sharply, resulting in a marginal deterioration in the sector’s overall indicator. At the same time, inventory levels decreased slightly. The divergence between current conditions and expectations for the future is one of the key features highlighted by the IOBE survey.

Services: Moderate Strengthening of Expectations

In Services, positive assessments of companies’ current business conditions strengthened slightly, as did assessments of current demand. By contrast, expectations regarding the short-term evolution of demand declined moderately. Despite this divergence, the sector’s overall indicator improved, contributing to the increase in the overall economic sentiment indicator.

Consumers: Greater Optimism and Intention to Spend

On the household side, the picture was considerably more positive. Consumers’ negative expectations regarding the general economic situation in the country eased, while a similar improvement was recorded in assessments of households’ own financial situation.

At the same time, expectations regarding major purchases strengthened significantly, while intentions to save also improved moderately. The improvement in consumer confidence therefore emerged as one of the key factors supporting the overall economic sentiment indicator in September.

Energy and Prices in Focus

Meanwhile, IOBE highlights the pressures arising from rising energy prices and increases in the cost of basic categories of goods, which are affecting both businesses and households.

According to the survey, any interventions in the energy market, support measures for specific social groups, or reductions in fuel taxes are expected to affect businesses and households, as well as the fiscal outlook over the coming months.

IOBE also notes that the European economy continues to operate amid inflationary pressures, with supply-side disruptions remaining significant and persistent. In Greece, the survey additionally highlights the potential impact of political developments on the economy over the coming period.