KEPE: Preliminary indications of a favorable climate in the economy are maintained despite the increase in uncertainty

Preliminary indications of a favorable climate in the economy are maintained, although there is an increase in uncertainty about the expected short-term course of the Greek market compared to the end of the previous month, with fluctuations within the month.

These figures are derived from the KEPE GRIV Composite Prognostication Index and “Fear” Index – July 2022 Estimates, compiled by the Center for Planning and Economic Research (KEPE).

In more detail, the two innovative and specialized indicators aimed at regular monitoring of the economic situation reflect the following:

– KEPE Composite Advancement Index

It is a Composite Forward Index (DPI) based on a dynamic factor model, constructed using six selected monthly economic variables with forward characteristics. It provides preliminary indications of the course and transformations in the Greek economic activity, before they are reflected in the current figures of the overall economic activity. According to the most recent observation for April 2022, the PPI fell marginally, continuing the previous increase, remaining close to the highest level of the overall investigation period, which was recorded in the immediately preceding reference period. This development appears to be linked to the intermediate volatility that often characterizes the BDS and does not appear to signal a reversal of the overall favorable path followed by the BDS since mid-2020. On this basis, it is considered that it does not generally contradict the formation of positive expectations and estimates on the part of participants in economic activity and that it continues to provide preliminary indications of the maintenance of an overall favorable economic climate. At the same time, it demonstrates that the negative effects of inflationary pressures and the energy crisis linked to the pandemic and the war in Ukraine do not prevail. In any case, the special circumstances that prevail make it necessary to re-evaluate the BDS with the aim of obtaining additional evidence. The integration of new data is expected to demonstrate the continuation or otherwise of the observed trends regarding the course of future domestic economic activity.

– “Fear” Indicator KEPE GRIV

The KEPE GRIV Implied Volatility index or “fear” index captures the uncertainty of derivatives market participants about the expected short-term course of the Greek market and is calculated based on the option prices of the FTSE/XA Large Cap index. KEPE GRIV index price in July 2022 reached 28.19% on 7/29/2022 from 25.27% on 6/30/2022. The evolution of the index reflects an increase in uncertainty about the expected short-term course of the Greek market compared to the end of the previous month, with fluctuations within the month. It is noted that the average daily price of the index decreased in July 2022 reaching 26.93% from 30.46% in June 2022. In addition, the index remained at levels below its historical average (since January 2004) for the Greek market, which is at 32.62%.