ECONOMY

Car sales contract in August

New vehicle registrations, including previously owned vehicles, went up in August by 1.5 percent year-on-year to 34,256, the National Statistics Services (NSS) announced yesterday. This was a massive fall from the 21.3-percent increase recorded in the same month last year. In the January to August period, new vehicle registrations fell by 1.68 percent to 307,079 from 312,225 in the corresponding period in 2000. The contraction in new vehicle registrations came three days after the NSS released data showing a slowdown in gross domestic product growth in the second quarter of the year. Economic activity increased by just 4.9 percent, against 6.1 percent in the first quarter, resulting in first-half growth of 5.5 percent. Schroder Salomon Smith Barney consultant Miranda Xafa said the sharp plunge in new car registrations in August underlined the downside risks of growth. Like the rest of the world, Greece could see tough times ahead as the economic outlook for the US worsens. A preliminary survey of consumer confidence released by the University of Michigan on Thursday shows a sharp fall in consumer sentiments. This, together with surging oil prices in response to the US threat of retaliation, could trigger a recession in the US and, by turn, the rest of the world, Xafa said. She noted that the local stock market was already getting a foretaste. Down by a year-record of 7.74 percent on Wednesday, the stock market erased Thursday’s slight gains with a 5.38-percent plunge yesterday to close at 2,248.39 points, a year low. Xafa also revised her GDP projection to 3.6 percent. The government has steadfastly stuck to its 4.6 percent growth estimate for 2001. Platon Monokroussos, head of research at EFG Eurobank, retains a more optimistic view. While new car registrations showed a cumulative drop from the beginning of the year, in absolute numbers, the figures were close to historically high levels, he said. The increased car sales are connected to the country’s credit growth and loan explosion, Monokroussos noted. On the one hand, Greece can expect to see a slowdown in consumer spending especially after the terrorist attacks on the USA. On the other, the Greek economy is currently being driven by special factors, helping to outweigh external influences. Continuing credit expansion and investment spending will spur economic growth this year. This is evident from the NSS statistics out this week which noted that investment outlay gave a sharp boost to GDP in the second quarter, he said. The spate of infrastructure projects financed by European Union funds and implemented in the next five years is also seen as a significant economic spur. Monokroussos predicted an overall slowdown which however will not be strong enough to deter Greek economic growth, still expected to be double that of the European Union. He sees GDP growing by 4 percent this year. Speaking in Budapest yesterday Pedro Solbes, the EU commissioner for monetary affairs, said the region could see growth falling below 2 percent this year, down from 2.8 percent estimated in April, as a result of the attacks on the USA.