IOBE: Inflationary Pressures and Middle East Uncertainty Persist in Greece

Greece's economic climate index showed an upward trend in May, reaching 107.5 points compared to 105.8 in April, according to a joint survey by IOBE and DG ECFIN. This improvement was primarily fueled by stronger expectations within the industrial and construction sectors, alongside a modest boost in consumer confidence. However, other economic areas experienced slight downturns.

The construction sector maintained its positive trajectory, with significant improvements noted in employment forecasts, despite a minor dip in expectations regarding business work programs. In retail, a marginal deterioration occurred, mainly due to more negative assessments of current sales, while short-term sales and inventory forecasts remained stable. The services sector saw a slight weakening, as short-term demand forecasts dipped, though assessments of the current business and demand situation held steady.

Within the industrial sector, business expectations saw a notable increase, rising to 113.9 points from 109.2 in April. This was supported by a near-balance in the negative outlook for orders and current demand, and improved production forecasts for the coming months. Consumer expectations also saw a mild improvement, with households showing a greater intention to make major purchases and save, although they remain the most pessimistic in the European Union.

Despite these positive indicators, inflationary pressures persist, contributing to elevated uncertainty, partly linked to developments in the Middle East. While tourism continues to provide moderate support to economic activity through increased travel receipts, a potential slowdown in Greece's economic growth could negatively impact the economic climate moving forward.