Economic sentiment in Greece fell to a seven month low in June as uncertainty stemming from the country’s elections weighed heavily on business activity, the Foundation for Economic and Industrial Research said Wednesday.
“It is clear that uncertainties during the election period were high, particularly in the business world, as economic activity was limited to the minimum possible transactions. On the other hand, it appears that expectations among consumers have been created for changes to the (government) policy mix,” it said in a report.
“The formation of a coalition has helped ease government uncertainties,” it added.
A coalition government–consisting of the conservative New Democracy party, the socialist PASOK party and their smaller leftist partner, Democratic Left–was formed in Greece after the June 17 elections, the second set of polls to be held in the country in as many months.
IOBE has been tracking economic sentiment since 1981.
IOBE said its monthly economic climate index fell to 74.1 points in June from 76 in May. That is well below the 89.9 reading in the euro zone and 90.4 in the European Union overall.
The index fell to a record low 67.2 for Greece in March 2009 and hit a high of 111.9 in April 2004, during Greece’s boom years.
But for the past 2 1/2 years, Greece has been struggling through a grinding recession made worse by waves of successive austerity measures that its European and international creditors have been demanding in exchange for financial aid.
The IOBE index provides one measure of how the country’s long recession, accompanied by painful wage cuts and tax increases, has weighed on national sentiment. The index combines consumer confidence with subindexes of business expectations in industry, construction, retail trade and services.
In June, business expectations in the industrial and services sectors fell, but remained steady in retail trade. Expectations rose in the construction business and among consumers improved, IOBE said.
(source: Dow Jones)
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