ECONOMY

Greece?s textile sector continues to unravel

The Greek textile sector is in very poor shape at the end of 2011, posting drops in production as high as 18 percent while orders for the domestic market have slumped 20 percent.

A recent meeting of the board of the Association of Greek Textile Industries on November 30 also confirmed the negative trends that have dominated the export market, which has shrunk by an additional 4-5 percent compared to last year after a brief period of optimism at the beginning of 2011.

Moreover, according to the Hellenic Statistical Authority (ELSTAT), the index of new orders for textile goods ebbed this September by 26.1 percent in the domestic market and by 17 percent in exports compared to the same month in 2010. Likewise, the industrial production of textile goods dropped 25.1 percent in September 2011 and 18.9 percent for the first nine months of the year, compared to 2010.

The association of textile manufacturers has expressed further serious concern over its ability to import raw materials, making the future of the sector look even bleaker. According to a report compiled following its meeting, the association said that when doing business with Greek companies, foreign suppliers are now demanding that all transactions be conducted in cash only, while they also refuse to accept guarantee notes from banks. The problems for the Greek textile industry are compounded by the absence of liquidity in the market, meaning that banks have pulled the plug on all sources of funding, forcing a number of businesses to seriously consider closing down entirely.

On the matter of banks, the textile industry has also complained about the amount of interest charged on loans, which can exceed 10 percent.

Given these circumstances, the industry is looking to the state to step in with measures to rejuvenate the sector, starting with a settlement of millions of euros in value-added tax owed by the state to businesses in the sector with high export activity. They also suggest that businesses sit down and calculate the amount they owe to the state vis-a-vis the amount it owes to them in order to reach some sort of settlement for the remaining amount.

Among other measures the association is seeking is the write-off for small and medium-sized businesses of an emergency property tax that is being levied via electricity bills, as well as a reduction in social security contributions by 50 percent for the next two years for businesses that have no debts in this area.