SEV: No more opportunities should be lost for the economy

SEV: No more opportunities should be lost for the economy

Athens, May 17, 2016/Independent Balkan News Agency

By Spiros Sideris

SEV (Hellenic Federation of Enterprises) asks that no more opportunities are lost for the economy, calling on the government “to seize without delay the favorable conjuncture that is being formed due to the agreement with its partners, effectively addressing the recessionary pressures of the forthcoming tax hikes and cuts in pensions and removing once and for all the possibility of starting a new cycle of uncertainty”.

In the monthly bulletin of economic trends, SEV notes that the completion of the first evaluation of the third greek adjustment program is expected to improve confidence, lift the market concerns, and create new prospects for recovery.

“This fact, is added, should be reflected in the figures of the second and especially the third quarter of 2016, confirming the positive forecasts for recovery rates from the second half of this year”.

However, it goes on, “the figures that are available to date, still reflect mixed trends without any clear direction, with industrial production and exports remaining almost unchanged in the first 3 months, retail sales declining despite improved expectations in retail and consumer confidence touches a new record low, while initial estimates of ELSTAT for the seasonally adjusted GDP speak of a recession of -1.3% in the first 3 months of 2016 on an annual basis (-0.4% compared with the previous quarter), compared to a decline -0.8% in the last quarter of 2015 on an annual basis (+ 0.1% compared with the previous quarter)”.

More specifically, according to figures released during last month sited by SEV:

– The business climate index in April 2016 showed no significant change compared to the previous month (at 90.3 points from 90.1 the previous month), at a level lower than that of 2015, showing tentative signs of stabilization. The picture on the key areas is mixed, with industrial confidence going up in the services and retail trade, remain unchanged in industry and worsening significantly in construction.

– Industrial production in manufacturing, excluding oil, despite having marginally declined in March 2016 (-0.4%), overall during the period January to March 2016 shows rise +1.9% against +1.3% in 2015 as a whole and -0.1% in the second half of 2015 (or +1.7% in the period August to December 2015, ie excluding July 2015, when production fell by -7.9%).

– At the same time, although the Purchasing Managers’ Index (PMI) in manufacturing was for the third straight month below 50 units in April 2016, production levels stabilized, while the raw materials markets and employment rose.

– Exports of goods excluding oil fell marginally in March 2016 (-0.3% and -0.2% in the first 3 months), continuing to exhibit edurance, despite the protests of farmers last month and weak demand worldwide.

– Wage employment is boosted with great dynamism in April 2016 (90,600 jobs), as seasonal hires are being made in preparation for the tourist season.

On the other hand:

– Consumer confidence deteriorated further in April 2016, at the lowest level in the last 32 months (to -73.7 points from -71.9 the previous month). The pessimism of households is growing, with the proportion of those who predict worsening of the economic situation rising to 73.8% (from 69.1% in the previous month), while their predictions for the evolution of unemployment continue to get worse.

– Despite the improvement in expectations in retail trade, the volume of retail sales without the effect of fuel fell in February 2016 (-5.5%). This is the largest decrease in the last two years has been recorded with the exception of the July 2015 (-6%), while in total in the first 2 months of the year the general volume index excluding fuels also showed a decrease (-2.9%), compared to -1.9% in the second half of 2015.

– In the current account balance, the revenue from services continue to record strong decline (-34% in February and -39.5% in the first 2 months), mainly due to the decrease in net transport (-39.9% and – 47.4% respectively), largely due to the restrictions on capital movements.

– Despite the potential positive prospects for tourism, both tourist arrivals and revenue have been falling overall in the first two months of the year (-11% and -5.6% respectively). Those months are not indicative for the course of tourism throughout the year and a possible intensification of the refugee problem may adversely affect the course of tourism during the summer months.

– Backed by these mixed trends, the Spring forecasts of the European Commission for the Greek economy are slightly improved compared to the winter, as it provides for a recession of -0.3% in 2016 and return to positive growth in 2017 (2,7%) if confidence is restored and the necessary reforms are made”, SEV says.

– On this basis, the Greek Government is asked to seize without delay the favorable conjuncture formed because of the agreement with its partners, effectively addressing the recessionary pressures of the forthcoming tax hikes and cuts in pensions and removing permanently the possibility of the start of a new uncertainty cycle”, SEV concludes.