The manufacturing outlook, economic sentiment and consumer confidence indexes in Greece all posted a decline in March, according to the surveys released on Friday, as the impact of the war in Ukraine and its side effects on the supply chain and demand are clearly visible.
The Purchasing Managers Index (PMI), which measures expectations in manufacturing, dropped to its lowest point in 11 months, with S&P, which drafts it (it has taken over IHS Markit), revising its forecast on the annual growth of industrial output in Greece for 2022 downward to 2.3%.
The Greek PMI index dropped to 54.6 points in March – i.e. its lowest point since April 2021 – against 57.8 points in February. Client demand from abroad weakened significantly last month as new orders for exports contracted for the first time in a year.
The economic sentiment index by the Foundation for Economic and Industrial Research (IOBE) also posted a decline, only more moderate: The impact of the war – the existing and potential effects – has reversed the rising trend of the two previous months, sending the index to a 12-month low of 113.3 points, compared to 114 points in February, which highlights the widespread concern in the economy. The deterioration in business expectations in the service sector was particularly marked, while that in retail commerce was not as bad. The industrial and construction sectors remained in positive territory.
Households appear far more pessimistic: The consumer confidence index declined considerably in March, reaching -46.6 points against -39.5 points in the previous month and in March 2021. Last month’s reading was also the lowest in the last 16 months.
According to IOBE, this development is attributed to the steep rise in retail prices: “The reduction of real incomes and its effect on consumer demand with the possible consequences on employment etc, as well as the other political and economic developments resulting from the war, mainly depending on its duration, will constitute the most decisive factor for future household expectations.”
Household expectations have deteriorated both for the national economy and for their personal finances.