Problem spots: Banks, retail sales and technology
The gradually emerging overall picture of firms’ first-quarter results points to three main sources of problems, which also define the prospects of a recovery. Reduced consumption, investment programs that proved unrealistic, and conditions that have not yet matured for such programs to yield satisfactory returns, have all had an unfavorable impact on results. In response, many firms are being forced to revise plans and targets. Banks, a sector that has always been regarded as the engine of growth, are facing a significant drop in profits. This situation is due largely to the long stock market slide, which cuts into easy profits. But this is not a wholly negative development, as it forces banks to focus their efforts on their mainstream activity. At the same time, certain buyouts they carried out during the market euphoria two or three years ago ultimately proved more costly than they thought. So if you leave aside the easy profits from stock market operations, the efficiency of banks is not much greater than that achieved by the broad public sector, despite the progress made in recent years. Another problem area is retail sales. In recent years, the retail chains for electrical equipment, information technology and clothing have grown rapidly, succored by the lifting of restrictions on consumer loans and on the use of credit cards, and by easy gains from stock market operations. Now they have to review their course and rationalize their expansion. The third source of problems are companies in the domains of software and IT solutions in general, including training and consultancy, which were preparing to receive European Union subsidies that had been announced euphorically by ministers. Most of these enterprises anticipated such announcements and invested accordingly in order to win projects, although these have been delayed for various bureaucratic reasons. The public sector proved much more adept at announcing impressive initiatives (e.g., for the information society, information technology in schools) but less effective in actually realizing the announcements. When it eventually comes to the implementation stage, the specifications have often been rendered obsolete by technological realities, while the assignment methods used are often scandalous. These sources of problems largely explain the widespread disaffection in the urban areas that host the population groups that are most affected. In rural areas, despite the continuing drop in the farm population, farm incomes are also falling. By the end of this summer, it will also be clear to what extent demand in the tourism sector will have propped up incomes and jobs. The first indications are not particularly encouraging, but it may be worth remembering that tourism entrepreneurs usually go through a crisis of pessimism when they go after the new season’s contracts early in the year. So far, they are claiming that bookings are low and hotels are therefore likely to have late openings. Meanwhile, construction companies and those related to public projects and building activity are showing impressive results. At one time, the buoyancy of the building sector was a prerequisite for the growth of the Greek economy; now the beneficial effects on growth are not so direct, but this sector nonetheless will undoubtedly provide a welcome boost to the market. – In the traditional grain route, US Gulf / Japan, the 20 USD mark has been achieved twice.
