ECONOMY

Car sales hit the brakes

New vehicle registrations, an important indicator of consumer spending, declined by 5.7 percent year-on-year in November, according to figures released by the National Statistics Service (ESYE) yesterday, underscoring the slowdown in the Greek economy in the final quarter of the year. The number of new vehicles – including cars, trucks, buses and motorcycles – and secondhand vehicles circulating in the country last month amounted to 27,365 which is down 16.81 percent from October. The figures point to a deceleration in the Greek economy, which is suffering the same fate as the rest of the world, said EFG Eurobank Ergasias economist Platon Monokroussos. The vehicle statistics are clear signs of an economic slowdown in the final quarter which has to do with the global downturn, he said, in sharp contrast with unbroken growth in the first three quarters of the year. He said that other indicators, such as the decline in the October consumer confidence index, supported the assessment. The government’s updated stability and growth program for 2001 submitted to Brussels early this month similarly warned of declining private consumption demand in the last quarter of the year. Monokroussos said that overall consumer spending this year is expected to remain resilient despite slackening growth towards the end of the year, one principal reason being the continual credit boom. Figures compiled by the Bank of Greece showed an 8.7-percent increase in credit expansion in the first nine months of the year, underlining the strong growth brought on by falling interest rates and the ongoing war in the mortgage market. Greek consumer buoyancy is also evident in retail sales. Figures released by ESYE on Wednesday showed a 7.4-percent jump in the revised retail sales index in September. Monokroussos said the surge in real estate prices, a significant component of household wealth, is also helping to offset the negative effect from the stock market downturn and reduced income from bank deposits. He also warned against hopes of an early recovery next year. The economic deceleration is expected to continue to 2002 and will probably be more pronounced in the first few months.