Economic sentiment drops to seven-month low

Sentiment on Greece’s debt-laden economy fell to a seven-month low in June as uncertainty persisted, with manufacturing and construction worst hit, the country’s leading economic institute said on Wednesday.

With unemployment hitting record levels and wages squeezed by higher taxes, Greek consumers remain the most pessimistic in Europe, the Foundation for Economic and Industrial Research (IOBE) said. Three in five expect their economic situation to

worsen in the next 12 months.

The think-tank said its index — based on consumer confidence gauges and indexes for business expectations in manufacturing, construction, retail and services — fell to 74.1 points in June from 76 points in May. It was well below its average level of 100 in 1996-2006.

However, the foundation said economic sentiment in retail trade and services improved marginally.

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 II.

Almost 22 percent of Greeks are unemployed.

The 215 billion euro ($271 billion) economy is expected to contract by more than 5 percent this year after a 6.9 percent slump in 2011.

The drop in Greece’s overall economic sentiment in June compared with a drop in the eurozone’s reading in the same month, to 89.9 points from 90.5 in May. [Reuters]

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