The economic climate in Greece was slightly worse in October, according to a survey by the Foundation for Economic and Industrial Research (IOBE), one of the country’s most respected think tanks.  

IOBE’s economic climate index lost ground in October, dropping to 91.2 after reaching 93.1 in September. The data was published on Monday, as part of IOBE’s Business and Consumer Survey. 

The main cause for the drop in the index was worsening expectations on the part of businesses active in industry and construction. A small improvement in the economic climate on the part of businesses active in the services sector, and a small rise in overall consumer confidence, were not enough to revert the negative trend.

High unemployment

According to IOBE, there are two contradictory tendencies influencing businesses and consumers in Greece, with high volatility from month to month.

On the one hand, there is a marked improvement in Greece’s fiscal situation, with a small primary surplus for 2013 now being quite probable, according to IOBE.

There also are positive developments on the Athens Stock Exchange, with investors, especially foreign ones, showing more interest.

On the other hand, unemployment is at very high levels and liquidity for businesses and households is very limited. IOBE expects there to be more tax pressure in the two coming months. As a solution, IOBE analysts say that entrepreneurship must be supported and that improvement of competitivity at an international level will lead to the creation of new jobs.

The IOBE Business and Consumer Survey at a glance

Consumer trust: households have positive forecasts for October but forecasts for how unemployment will evolve over the next twelve months are increasingly negative.

Industry: increase in inventory stocks and drop in orders indicate even lower demand.  

Services: Improved climate, steady demand, negative short-term growth.

Retail commerce: Negative forecasts for current sales.  

Construction: Adverse forecasts for business activity, slight rise in sector employment rates.

Improvement in the Euro zone and the E.U.

The economic climate has improved for a six months in a row for October in the Euro zone and the E.U. The relevant IOBE indexes were 97.8 and 101.8, respectively. There is a positive trend since May, but improvement has slowed in the last few months and not all sectors of the economy are positively affected.