ECONOMY

Sentiment deteriorates in November

Greek economic sentiment deteriorated in November, driven by falling business in the services sector as a result of austerity measures imposed by the European Union and the International Monetary Fund, according to a survey prepared by the Foundation for Economic and Industrial Research (IOBE). IOBE said its economic climate index – based on business expectations sub-indices covering industry, construction, retail trade, services and consumer confidence – dipped to 67.0 from 67.3 points in October. That was still higher than a reading of 66.6 in September. However, the sub-index for service businesses such as restaurants, hotels and software providers hit a six-month low. «There is widespread discontent across the board,» IOBE said. «Most [service providers] expect demand to continue falling in the following months.» Greece’s economy is in the second year of a recession and the government forecasts it will contract 4.2 percent this year and 3 percent next year before returning to growth in 2012. The state budget deficit, which was more than five times the EU’s 3 percent ceiling in 2009, shrank 30 percent in the first 10 months of the year, according to final data released by the Finance Ministry on November 22. Sentiment also took a turn for the worse in industry and retail trade, where firms said they did not expect much relief during the Christmas shopping season. Consumer confidence improved slightly to -69, from a record low -72 in October. «Greek households remain cautious and restrained when faced with the current economic climate,» IOBE wrote. «Continued alleviation of the negative index in the next months could be an indication of the gradual readjustment of consumers’ hopes to the new economic facts.» The government has pledged additional budget cuts worth 2.9 billion euros next year to achieve its 2011 budget targets under the EU-IMF bailout.