Industry and construction suffer
High costs and delivery delays take industrial output growth projection to just 1.6% for 2022
The high prices and the constant delays in the delivery of raw materials and packaging commodities have led to a drop in new orders in industry, resulting in projections of modest growth in output for the entire year.
The maintenance of energy rates and raw materials prices at high levels has forced hikes to be passed on to product prices, now that most companies have run out of stock bought at lower rates. At the same time the continuing problems in supply chains are generating significant problems too, with their impact set to continue until at least end-2023, market professionals told Kathimerini.
In an effort to maintain their cash reserves at satisfactory levels, as demand may drop and prices may well come back down in the future, a number of enterprises are refraining from placing large orders, a trend seen internationally. An official from a Greek firm producing packaging materials says it is not unusual for clients from abroad to suddenly order supplies for production to be implemented within a few days, and have them sent over even by air.
S&P Global showed on Wednesday that the Purchasing Managers Index (PMI) came to 53.8 points in May (down from 54.8 in April), the lowest level since March 2021. S&P Global projects Greek industrial output will only increase 1.6% this year.
The sector of construction materials is among those to have suffered most, as the very high rates and inflationary pressures are forcing households to freeze any plans for home renovations.
Therefore the business expectations index in construction slumped last month to 103.7 points from 132.2 points in April, per the Foundation for Economic and Industrial Research (IOBE). Only 9% of the sector’s enterprises reported that their operations were continuing unhindered; over one in three (35%) reported low demand, 27% cited workforce shortages and 25% spoke of insufficient financing.
Nevertheless the benefit expected from tourism sent the economic sentiment index to 108 points in May, from 105.1 in April.
