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Financial News: Greek econ sentiment index unchanged in Sept-Nov

Δημοσίευση 23 Δεκεμβρίου 2010, 12:58 / Ανανεώθηκε 27 Ιουνίου 2013, 14:55
Financial News: Greek econ sentiment index unchanged  in Sept-Nov
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Greece’s economic sentiment index was unchanged in the September-November quarter from the previous quarter (June-August), standing at 67 points on average, the Institute for Economic and Industrial Research (IOBE) announced on Wednesday.

Greece’s economic sentiment index was unchanged in the September-November quarter from the previous quarter (June-August), standing at 67 points on average, the Institute for Economic and Industrial Research (IOBE) announced on Wednesday.

In a report, IOBE said the index remained below the 70-point level since March after reaching a low of 61.9 points in May. The September-November performance of the index was significantly lower compared with the long-term average rate of the 2001-2009 period (95.7 points) and well below the 78.4 point level of last year. Business expectations remained at very low levels, particularly in the retail sector and construction, while consumer confidence has fallen to record low levels, hit by a credit squeeze in the country.

From the demand side, consumer confidence fell further in the quarter, to new record lows, with Greek households’ expectations worsening further, while on the supply side, a mild recovery of business expectations was recorded in constructions and retail sector, a slight improvement in manufacturing, while in services expectations remained unchanged at last quarter’s levels.

IOBE said an agreement reached between the Greek government and the troika and the measures currently implemented were necessary to restoring fiscal stability and improving the country’s competitiveness and noted that without the memorandum, the country would have defaulted on its debt with devastating consequences over its economy and social cohesion.

The Institute, however, noted that the measures were fully necessary but were inadequate to ensuring the economic recovery of the country. IOBE expects an economic recession to reach 4.2 pct this year, pushing unemployment at 12.2 pct for the year. In a report, IOBE noted that the memorandum failed at promoting development while it also included significant gaps (such as the pension system) and needed to be reviewed. It also said that authorities failed to fully explain the feasibility of the government’s fiscal adjustment effort, creating insecurity among citizens and allowing speculative moves in markets.

IOBE said that the opening up of closed professions and abolishing hurdles in business activity could boost the country’s GDP by more than 17 pct in the long-term and by around 10 pct in the next five years. The Institute, however, stressed that these benefits have not been properly promoted in the troika’s official reports thus they were largely ignored by markets.

IOBE also urged for speedier moves towards a better exploitation of the state’s real estate and recommended a package of 11 measures aimed at abolishing all tax exemptions offered to citizens and their replacement with focused direct spending; an electronic system to detect and combat tax-evasion; reviewing all social benefits; merging state hospitals and privatising smaller and less used state hospitals; merging and abolishing certain military units; merging higher education institutes; another reform of the pension system; simplifying legislation, setting quantitive targets in upgrading state institutions and linking energy with research and innovation.

It also called for the use of managers from the private sector to help in achieving the government’s ambitious goals.