IOBE: Greek economic sentiment improves in May

According to the Foundation for Economic and Industrial Research (IOBE) Economic Sentiment Survey, the improvement was driven by stronger expectations in industry and construction, as well as an increase in consumer confidence, while the remaining sectors recorded modest declines. In construction, the upward trend observed in recent months continued, whereas retail trade experienced a marginal deterioration, mainly due to pessimistic assessments regarding current sales. In the services sector, sentiment weakened slightly as a result of less optimistic expectations concerning short-term demand prospects.

In industry, expectations for production over the coming months strengthened significantly. On the household side, although Greek consumers remain the most pessimistic in the European Union, they expressed somewhat more optimistic expectations regarding both their household finances and the overall economic outlook compared with the previous month. At the same time, intentions to make major purchases increased markedly, while the propensity to save also improved. Inflationary pressures remain persistent and may even be intensifying, as reflected in the trajectory of the relevant Consumer Price indices, with continued uncertainty surrounding the ceasefire in the Middle East remaining a key factor. Domestic economic activity is receiving modest support from inbound tourism, which contributed to an increase in travel receipts from abroad at the beginning of the year. However, any slowdown in the growth of the Greek economy could weigh on economic sentiment among businesses and households in the coming period.

More specifically:

• Industry: The negative balance of assessments regarding orders and current demand eased slightly, while the positive balance of production expectations for the coming months strengthened modestly. Inventory levels remained unchanged.
• Construction: Slightly positive expectations regarding companies’ work programmes weakened marginally, while employment expectations improved significantly.
• Retail Trade: Positive assessments of current sales declined slightly, while inventory levels and short-term sales expectations remained unchanged.
• Services: Positive assessments of the current business situation and current demand remained stable, while expectations regarding short-term demand developments weakened modestly.
• Consumer Confidence: Households’ negative expectations regarding both the country’s economic situation and their own financial condition eased. At the same time, expectations for major purchases strengthened significantly, while intentions to save improved moderately.