The economic atmosphere is improving but few Greeks are feeling it in their pockets. This contradiction, widely expected given how long the road to recovery is, was clearly reflected in the business and consumer surveys of the Foundation for Economic and Industrial Research (IOBE) for February.
Entrepreneurs’ expectations – with the exception of the retail commerce sector – have clearly improved, but at the same time the consumer confidence index dropped two points in a month.
The IOBE survey showed that the economic sentiment index reached 104.3 points in February, from 101.9 points in January and 93.1 points in February 2017. There is a similar trend in the various economic sectors: Industry was at 103.1 points (from 98.5 in January), construction 63.4 points (from 55) and services 87.6 points (from 82.2). Another encouraging development concerns the big rise in the Purchasing Managers Index (PMI) to the highest point in the last 17 years, to 56.1 points, according to Markit.
However, the IOBE consumer sentiment index fell to -53 points, from -51 in January, with Greek consumers remaining the most pessimistic in the European Union.
How is this gap between business and consumer confidence explained? “The broader framework is the consolidation of relatively normal conditions, as the adjustment program and particularly the most recent bailout reviews are proceeding normally and heading for completion. The improvement in expectations is due to the positive international environment that favors exporting enterprises and spreads to the sectors related to those companies,” IOBE explained.
Households do not grasp the completion of the third bailout review in the same fashion: Although that did not come with any fresh fiscal measures, the previously voted measures continue to add to pressure on consumers, who do not discern any substantial growth momentum. IOBE also estimates that consumer confidence has also been affected by developments in foreign policy matters.