The economic climate index compiled by the Foundation for Economic and Industrial Research (IOBE) declined in April, falling to 105.7 points from 106.8 points in March. This decline stems from weakened expectations in the industrial sector, as well as in consumer confidence, with the remaining sectors showing an upward trend.
In Construction, the upward trend of recent months has resumed, while in Retail Trade there is an improvement, albeit only marginal, mainly due to pessimistic forecasts for orders in the near term. In Services, a significant improvement is recorded, due to optimistic assessments across all sub-sectors. In Manufacturing, expectations show a mild negative shift.
On the household front, Greek consumers remain the most pessimistic in the EU, expressing even more negative forecasts for their household finances compared to the previous month, as well as the country’s overall economic situation, while their intention to make major purchases and their intention to save are weakening.
The overall environment is highly volatile. New inflationary pressures have already emerged, affecting households and businesses, with many sectors facing the immediate consequences. Uncertainty regarding the control of shipping through the Strait of Hormuz is having a critical impact on the oil market, a fact reflected in the sharp price fluctuations in energy markets.
At the start of the summer season, sectors directly related to tourism may be significantly affected by these developments, with broader consequences for the Greek economy, as revenue from travel services constitutes a critical component of the country’s gross domestic product. The broader realignment of economic and geopolitical forces, driven primarily by U.S. policies over the past year, is putting economies to the test.
The duration of the new crisis in the Middle East—and particularly whether the temporary ceasefire leads to normalization or a new flare-up—will be a decisive factor in shaping the economic climate in the coming period.
In more detail:
➢ In the manufacturing sector, the negative balance of assessments regarding orders and current demand weakened slightly, the positive balance of forecasts for production in the coming months declined accordingly, while inventory levels rose slightly.
➢ In Construction, the mildly positive forecasts for firms’ work schedules strengthened significantly, while positive forecasts for employment weakened slightly.
➢ In Retail Trade, mildly positive assessments of current sales strengthened, with inventory levels declining slightly and forecasts for short-term sales trends weakening slightly.
➢ In Services, positive assessments of the current business situation strengthened significantly, positive assessments of current demand improved accordingly, while forecasts for short-term developments moved upward.
➢ Regarding Consumer Confidence, households’ negative forecasts for the country’s economic situation strengthened, as did those for their own financial situation. At the same time, expectations regarding major purchases weakened, while the intention to save declined sharply.