ECONOMY

Economic sentiment declines

Greek economic sentiment deteriorated in December, weighed down by a less upbeat outlook in the industrial and construction sectors, the Foundation for Economic and Industrial Research (IOBE) said yesterday. Greece’s overall economic climate index is based on business expectation sub-indices covering industry, construction, retail trade, services and consumer confidence. In December, the index fell to 105.1 points from 107.6 in November, its third monthly drop in a row and its second-worst reading for 2007. The reading fell below the benchmark for the 27-nation European Union but outperformed the eurozone index, which came to 104.7. «The deteriorating climate in industry is mainly due to a projected drop in the volume of orders, a view supported by higher inventory. In construction, the outlook for employment is more moderate for the next quarter,» IOBE said. By contrast, in services and retail trade the business outlook was steady. Consumer confidence was also steady but the reading continued to be among the most pessimistic in the European Union. Separately, the National Statistics Service (NSS) said industrial output rose 4.2 percent year-on-year in November, boosted by higher manufacturing and energy production. «Industrial output increased in November due to an acceleration in manufacturing production, particularly in the energy and non-durable consumer goods sectors. The growth rate of manufacturing production is expected to exceed 1.5 percent on an annual basis for the whole of 2007, which is the highest rate in the last five years,» said National Bank economist Nikos Magginas. Sluggish exports The NSS also said Greek export growth recorded a sharp slowdown in November, largely due to the strong euro. Exports in November were up just 0.7 percent year-on-year, to -1.52 billion, while imports exceeded -4.6 billion, up 4.7 percent. In the 11 months to November, exports totaled 15.7 billion, up 4.02 percent, while imports rose 10.4 percent to -48.8 billion. As a result, the country’s trade deficit in 2007 grew from -29 billion in the same period of 2006 to -33 billion, or 14.4 of gross domestic product. The widening of Greece’s trade deficit largely reflects the economy’s chronic competitiveness problem, which appears to be worsening due to global uncertainties and the strong euro. In the January-October 2007 period, for which there are analytical data, exports to other EU partners increased 24.2 percent, while those to other countries, where exchange parities matter, fell by an almost equal percentage. Furthermore, exports are seen as adversely affected by a projected slowdown in the global economy, while imports are forecast to continue growing at a brisk pace due to the maintenance of consumption and investment at high levels. Meanwhile, the European statistics service, Eurostat, said the Greek economy grew at a pace of 3.8 percent in the third quarter of 2007, against an average of 2.7 in the eurozone and 3 percent in the EU as a whole. On a quarter-to-quarter basis, Greece’s growth stood at 0.9 percent.