Confident businessmen, despondent consumers

Despite the recent rise of the Athens Stock Exchange, which now shows sign of petering out, signals about the economy are mixed. Data on consumer and business confidence released yesterday by Eurostat, the European Union’s statistics agency, confirmed the conflicting nature of the signs. The data, tracking business and consumer confidence in June, shows that the confidence of Greek businessmen increased more than elsewhere in the EU, while consumer confidence took a dive greater than in any other EU country. Specifically, the EU’s economic sentiment indicator (ESI) increased by 0.2 percent to 98.5 and 0.1 percent in the eurozone to 98.2 (against an average of 100 during the nine previous years). The biggest increase was in Germany (0.4 percent) and the United Kingdom (0.3 percent). The biggest decline was in Sweden (0.8 percent), followed by Finland (0.5 percent) and the Netherlands (0.4 percent). The ESI in Greece remained unchanged, with the two entirely contrary trends mentioned above canceling each other out. Specifically, the industrial confidence indicator rose 3 percentage points in Greece, while remaining stable in the EU as a whole. On the other hand, consumer confidence dropped five percentage points, whereas in the EU, it went up 1 percent. The rise in industrial confidence in Greece is essentially the result of the great increase in order books – by 6 percentage points. Production expectations also increased significantly, whereas in other countries, such as Finland and Sweden, it dropped dramatically. On the consumer side, confidence increased mostly in Germany, Spain and Portugal (3 percent each). Only Luxembourg came closed to matching Greek consumer pessimism. In both countries, consumers fear a turn for the worse in the economy, including expectations of increased unemployment. It is interesting to note that Greek businessmen also forecast higher unemployment. This loss of confidence on consumers’ part is directly related to a sense that the government, paralyzed by expectations of a reshuffle, is failing to act. Ministers have shifted their priorities to an, ultimately futile, attempt to preserve their portfolios, even if they know that the decision rests solely with Prime Minister Costas Simitis. In this way, ministers fail to make decisions that could change the present negative perception about the government, which trails the opposition by over 8 percentage points in all polls. Simitis’s closest aids are continuing in their efforts to highlight the achievements of Greece’s presidency of the EU over the past six months. It seems, though, that ordinary citizens care little for those, or have already discounted them. It is the domestic issues – health, education, employment, state bureaucracy – they mostly care about.

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