ECONOMY

Greek economic mood slips in Jan; tough 2013 in store

Greeks became more pessimistic in January about their economic prospects, a survey showed on Wednesday, with a core sentiment reading holding close to a

two-year high but well down on pre-crisis years.

The Foundation for Economic and Industrial Research (IOBE)said its sentiment index for an economy in its sixth straight year of recession fell to 85.8 points from an upwardly revised 86.9 points in December.

The index is based on consumer confidence gauges and readings on the business outlook in four sectors; construction, retail and services – for which readings improved last month – and manufacturing.

In 2008, before the economy lurched into crisis, its average reading was 98.6.

“The uncertainty noted in previous months has clearly abated as the continued funding of the economy by Greece’s (EU/IMF) partners has built credibility, which is positively viewed by survey participants,» IOBE said in its monthly survey.

But it said most survey participants expect 2013 will be especially difficult as the impact of the country’s fiscal adjustment effort will affect the entire economy, particularly during the first half.

Based on the survey, Greek households remained the most pessimistic in Europe as increased taxes and cuts in pay and pensions weigh more heavily.

Greece’s international lenders – its eurozone partners and the International Monetary Fund – agreed in December to disburse nearly 50 billion euros in bailout aid to keep the debt-burdened country afloat.

The aid was unlocked after Athens committed to a 13.5 billion euro package of savings and labour reforms to shore up public finances and improve its economy’s competitiveness.

IOBE has said it expects the economy to remain in recession in 2013, with national output (GDP) seen contracting by 4.6 percent, weighing on unemployment which has already climbed to nearly 27 percent.

Based on the survey, Greek households remain the most pessimistic in Europe, followed by consumers in Portugal and Cyprus, as increased taxes and cuts in pay and pensions become increasingly felt.

[Reuters]