ECONOMY

IOBE notes bleak economic outlook

Greek economic sentiment declined in September for the first time since May and consumer confidence also fell amid heavy pessimism regarding the country’s economic recovery. The Foundation for Economic and Industrial Research (IOBE) said its economic climate index – based on business expectations sub-indices covering industry, construction, retail trade, services and consumer confidence – fell to 66.6 from 67.9 points in August. «Business expectations have remained at very low levels over the last seven months, with retail trade, construction and consumer confidence on the demand side having taken the biggest hit from the adverse economic circumstances,» IOBE said. It said cutbacks in consumer spending coupled with a credit crunch, which limits liquidity, were keeping the economy on the path of recession, a picture unlikely to change in the next quarter. «The intense pessimism and fears by Greek consumers concerning their deteriorating economic leverage and weaker purchasing power haven’t been alleviated,» IOBE said. «The austerity measures and surrounding atmosphere are leading to more conservative consumer behavior and an effort to bolster savings, which leads to lower private consumption.» IOBE said poor prospects for residential construction and public works after cuts in the government’s public investment outlays as well as tighter credit conditions had led to a sharp deterioration in the sector’s outlook. The Athens-based think tank said reduced household incomes, higher taxes and uncertainty were taking a toll on the retail trade sector, weakening demand as consumers worry about rising unemployment. The slide in Greece’s overall economic sentiment contrasts with a better eurozone reading in September. The 16-nation bloc’s economic sentiment benchmark rose to 103.2 points, reflecting a continued economic recovery in the third quarter.