IOBE: Slight decline in the economic climate index in December

The economic climate index in Greece fell slightly in December, as it did in Europe as a whole, to 110.3 points (from 113.4), according to a survey by the Foundation for Economic and Industrial Research (IOBE).

As noted, the index is still moving at high levels and does not incorporate the very recent developments of the pandemic, with the outbreak of the new mutation and the policy measures to deal with it. The decline was mainly due to the sharp deterioration of business expectations in Services and Construction, while the change in Industry was mild.

On the contrary, the expectations improved sharply in the Retail Trade, at the level of the summer of 2019, as it seems that the activity moved at satisfactory levels in almost all sub-sectors, under the temporary influence of the seasonal bonuses.

On the consumer confidence side, the decline continued, following its temporary rise in November, as inflationary pressures escalated and concerns were expressed about the evolution of real household incomes.

It is noted that the index was at exactly the same performance as at the beginning of the year (January 2021), but when the country was in a lockdown state. At present, protection measures cover far fewer activities and are lower in intensity than in previous cycles of policy intervention.

However, as the outbreak of the new mutation is in progress, their extent in the near future and their impact on the economy are not a given. Overall, assessing the course of the economic climate index in 2021, it was characterized by a strong increase, especially in the second quarter of the year, while in general its development is synchronized with the dynamics of GDP. It is noteworthy, however, that the discrepancy appeared gradually in the second half of the year between the trends in business expectations and consumer confidence, with the second indicator deteriorating significantly (June ’21: -25.6 points, December ’21: -43 , 2 units).

This fact highlights different evaluations from businesses and households of the course of the Greek economy during the second half and its prospects for the new year. In more detail:

➢ In industry, the mildly positive balance of estimates for orders and demand strengthened slightly, inventories for stocks escalated slightly and positive output forecasts for the coming months eased slightly.

➢ in Construction, the negative forecasts for production fell slightly, while at the same time the forecasts for employment deteriorated. ➢ In Retail, estimates for current sales strengthened significantly, with inventories remaining almost unchanged, while positive forecasts for short-term sales escalated significantly.

Υπηρε in Services, the positive assessments for the current situation of companies remained high and declined slightly, as well as those for demand, while the forecasts for the short-term evolution of demand changed marginally.

➢ in Consumer Confidence, the negative forecasts of households for the economic situation of the country are strengthened slightly as the corresponding ones for their own financial situation within a year, while at the same time the estimates for major markets deteriorate and the intention to save declines.