Industrial output down by 2 percent in February

Greece’s industrial production posted a 2-percent year-on-year contraction in February, its third consecutive decline, data from the National Statistics Service (NSS) yesterday showed. Despite the negative production growth, the government, industrialists and economists agreed that the sector is set to return to positive territory in the coming months, with the year’s overall growth expected to overshoot last year’s level. The NSS’s figures showed the key manufacturing index in February down by 2.7 percent, smaller than the 4.6-percent drop recorded the previous month, as consumers cut back on durable goods purchases following a buying spree in 2000. The decline in industrial production is «not a particularly good development,» said EFG Eurobank Ergasias economist Platon Monokroussos, as it points to an economic slowdown. He said, however, that conflicting forward-looking indicators paint a mixed picture, notably the purchasing managers index, which continued to expand at rates higher than eurozone averages and industrial think-tank IOBE’s positive business confidence index. The PMI in April edged up to 54.3 percent, marking its 35th consecutive increase. Economy and Finance Minister Nikos Christodoulakis said the February blip was circumstantial and common all over Europe. It also came on the heels of high industrial production last year, which made for an unfavorable comparison. He said industrial output is expected to pick up rapidly in the coming months and even exceed original projections. Lending support to the official optimism, a study conducted jointly by research firm ICAP and SEV, the industrialists’ grouping, and released yesterday, forecast double-digit growth in sales and profits for the manufacturing sector this year. Manufacturing sales and profits are expected to increase by 12 percent, marking a remarkable turnaround from last year’s dismal results, when the sector posted a 9.2-percent fall in pretax profits. Businesses said their confidence in a recovery was based on the improved global economy, the restrained impact of last year’s slowdown, 2004 Olympic-related projects, the inflow of structural funds and Greece’s membership in the eurozone. A sustained recovery, however, will depend on companies’ competitiveness, the study warned. It said containing costs and investing in the business by upgrading the work force and adopting new technology are the only ways to boost competitiveness. More than half of the companies covered in the survey – 53.7 percent – commented on the positive impact of economic migrants, especially by boosting the labor supply, increasing contributions to the social security system, and increasing domestic demand.