Hurting economy
True to its line that the Greek economy is not facing any serious problems, the government continues to claim that the rapid rate of economic growth confirms that Greece is in no serious danger of recession. The government does not deny the effects of the unfavorable international climate, but – just as it did following the attacks on New York – it underestimates its effects on Greece and persists in its rather rosy view of the national economy. This attitude, out of step with Western concerns that the three-year downturn in the stock market will spill over into the real economy, also seems out of step with the accompanying negative messages from the domestic market. The crash of Connection, a company which imports top-brand apparel, is the loudest, though not the only, alarm sounded so far. Even if they cannot quote evidence to support their claims, entrepreneurs and others involved in trade concur that a general malaise and drop in sales is apparent in the luxury goods market, of big-name brands and expensive items. From shops selling major labels and jewelers to nightclubs that are cutting back on the number of shifts, everyone is talking about a visible drop in turnover. And this time it is not the usual commercial grumbling, according to which turnover has been dropping by 15 percent a year for decades. Their complaints are backed up by estimates from bankers who expect an increase in loans to businesses. And though the official statistics (balance sheets) have not yet confirmed an overall drop in turnover, businesses are having obvious difficulty replacing the profits from the golden days of the stock exchange with increased revenue from sales. As always, when the real, productive economy shows signs of recession, one cannot wait for confirmation from statistics; by then it might be too late. Those active in the economy must pay attention to these indications and adapt accordingly. For the market, this may involve the need for measures such as reducing prices, coordinating discounts or adapting advertising campaigns, and for banks, the advisability of a more flexible loans policy. As for the government, which is responsible for planning economic policy, the negative messages show that it must re-examine its policy in the light of shrinking economic activity, and not simply avow that all is going splendidly.
