Economic sentiment in Greece improved slightly in March after the country pulled through a debt cut plan that paved the way for a new EU/IMF bailout, the country’s leading economic institute said on Thursday.
The Foundation for Economic and Industrial Research(IOBE)said its index — based on consumer confidence gauges and indexes for business expectations in industry, construction, retail trade and services — rose to 75.7 points from 74.9 points in February.
“The successful implementation of the bond swap and expectations that banks will be recapitalized have contributed to a stabilization (of the economic climate),» IOBE said.
The mood improved among industry, services and consumers while it worsened further in construction and the retail trade.
The reading, however, remains at depressed levels, near its historic low of 67.2 points in March 2009 and well below its 10-year average of 96.3 points, according to IOBE figures.
“Uncertainties over the course of the economy persist,» IOBE said, citing firms’ and households lingering doubts over the country’s capacity to implement the budget cuts and economic reforms that are part of the bailout.
Greece’s economy, which accounts for about 2.5 percent of the eurozone, is seen staying in recession for a fifth straight year in 2012. It slumped by 6.9 percent in 2011, its worst performance since the World War II.
With unemployment rising and wages squeezed by higher taxes, Greek consumers remain the most pessimistic in Europe, IOBE said. Seventy-six percent of them expect their economic situation to worsen further in the coming 12 months, slightly down from 84 percent in the previous month.
Consumers’ propensity to save dropped to a record low in March, with 92 percent of respondents saying they don’t expect to have any spare cash to bolster their bank accounts over the coming year.
The uptick in Greece’s overall economic sentiment compared with a slight drop in the corresponding eurozone reading in March, to 94.4 points in March from 94.5 in February. [Reuters]