ECONOMY

Expectations stable in June, demand in tourism seen lower

Greece’s Economic Climate Index (ECI) remained stable at 100.9 points in June, favorably affected by advances in the industrial and retail commerce sub-indices, but moderated by a rather pessimistic outlook among consumers and less upbeat forecasts for the construction sector, the Foundation for Economic and Industrial Research (IOBE) said in its monthly survey. The industrial sub-index advanced further from 99.6 in May to 101.2 in June – nearing its highest level in the last six months – as a result of more positive demand forecasts and, to a lesser degree, by a liquidation of stocks. Firms’ forecasts for sales levels and exports in the coming months remained upbeat but more moderate compared to May’s, while the percentage of those expecting prices to remain stable declined to 88 percent. In construction, the Business Expectations Index fell from 129.0 in May to 124.1 in June, solely as a result of companies’ more cautious forecasts as regards employment in the coming months; but IOBE said such forecasts are likely to be revised upward as 13 percent of firms said they faced labor shortages, and other factors affecting climate in the sector showed improvement. Expectations deteriorated in the private construction sector, where 33 percent of enterprises expect a fall in employment, but improved in public projects, where most firms expect stable employment levels and 87 percent foresee stable prices in coming months. In retail commerce, the Business Expectations Index rose from 109.5 in May to 114.1 in June, on the back of higher sales expectations; 50 percent of businesses reported higher sales in recent months and the percentage of those forecasting a decline fell; 34 percent expect sales to rise and 9 percent to fall. Services An improvement in the climate was also recorded in the services sector, where the index advanced from 84.0 in May to 90.1. Inflationary expectations declined and prices are seen as staying stable in coming months. In the hotels and restaurants sector, demand remained low and 71 percent of firms surveyed said this was their biggest problem, compared to 52 percent in May; 51 percent of travel agents took the same view. Among firms providing information technology services, the prevalent view is that demand has been rising and will continue to do so in the near future; 25 percent of them say insufficient working capital is their biggest problem.