Economic sentiment nosedived in May
The economic sentiment index in Greece showed a fresh deterioration in May, despite the gradual lifting of restrictions and the resumption of most economic activities. The index compiled by the Foundation for Economic and Industrial Research (IOBE) showed a reading of 88.5 points, against 99.3 points in April.
“The deterioration of the economic sentiment recorded highlights the depth of the economic crisis, which is expected to have a significant duration and to affect all economic sectors structurally, and not temporarily,” IOBE noted on Monday upon publication of the data.
The index of business expectations in industry slumped to 82.8 points last month from 97.6 points in April, reaching the lowest point in the last four-and-a-half years, with the most negative estimates concerning new orders for the domestic and foreign markets.
A similar picture emerges from the purchasing managers index (PMI) that IHS Markit compiles. That index recovered to 41.1 points in May from 29.5 points in April, but remains well below 50 points, which is the border between recession and growth. IHS Markit also notes that the drop in output and the reduction of new orders and employment are among the strongest recorded since 2015.
“Our current projections for industrial output point to considerable shrinkage during the second quarter, as an estimated annual reduction of output of 7.8% is expected during 2020. Although production is projected to increase toward the end of the year, the strong effect of tourism on the Greek economy will inevitably be channeled to all sectors, given that domestic demand remains weak,” IHS Markit estimates.
The business expectations index for retail commerce was in freefall last month, as the reopening of stores did not come with an increase in turnover, while sales in online commerce contracted. This index slumped to 65.8 points from 90.6 points in April.
There was an even greater decline in business expectations in the service sector: That index nosedived in May to 47.9 points, from 80.9 points in April. Just 12% of enterprises in the sector said they continue to operate without problems.
The expectations index for construction showed a mild improvement to 18.5 points from 14.3 points in April, while the consumer confidence index remained weak, at -33 points, from -32.6 points in April.