ECONOMY

Economic mood ticks up before election

Sentiment about Greece’s economy,now in its fifth year of recession, improved slightly in April ahead of Sunday’s national election, but less than before previous elections, Greece’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 manufacturing, construction, retail and services – rose to 77.3 points from 75.7 points in March,

where 100 is the average level between 1996 and 2006.

“Since 1981, economic sentiment has improved markedly every time an election approached, boosting the positive outlook of households and businesses. But this time there appears to be no margin for particular optimism,» IOBE said.

It said uncertainty about the economy and the implementation of an austerity programme that Athens is carrying out in return for an EU/IMF bailout continued to weigh. Almost 22 percent of Greek workers are unemployed.

Political analysts say the outcome of the election is hard to predict. Greek voters are unlikely to pick a clear winner, meaning parties will need to form a coalition government to carry on with the policies international lenders demand.

Greece’s fiscal derailment in 2009, when its budget deficit ballooned to 15.6 percent of national output, sparked its worst economic crisis since World War Two.

The 215 billion euro economy is expected to contract by about 5 percent this year after a 6.9 percent slump in 2011.

The think tank said the mood improved most in manufacturing and construction, while sentiment in the retail trade rose only marginally.

With unemployment hitting record levels and wages squeezed by higher taxes, Greek consumers remain the most pessimistic in Europe, IOBE said, followed by Portugal, Hungary, Bulgaria, Romania and Cyprus.

Four out of five Greek consumers expect their economic situation to worsen in the next 12 months, with 77 percent of households also expecting the economy to fare worse.

The modest uptick in Greece’s overall economic sentiment in April compared with a drop in the euro zone’s reading in the same month, to 92.8 points from 94.5 in March.

[Reuters]