Greece Economic Sentiment Improving

Households and corporations are more optimistic about the short-term course of the Greek economy according to an economic sentiment survey conducted by the Foundation for Economic and Industrial Research for July.

Last month’s reading of the economic sentiment index rose to the highest level since February 2015 (just after the leftist-led government was formed), reaching 98.4 points from June’s 94 points. IOBE estimates that this is an indication that the economy will pursue a positive course in the second quarter of the year, ekathimerini.com reported.

The same survey also recorded a gradual drop in pessimism among corporations and consumers, which IOBE attributes to the completion of the second bailout review, the disbursement of most of the bailout tranche and the strengthening of the impression that the program is on course, despite the delays.

The improvement in expectations and in consumer confidence appears to be linked to the momentum of incoming tourism and growth in the economy’s exporting sector.

Meanwhile, the country’s manufacturers notched up their second consecutive month of rising activity in July, the first time they’ve achieved that feat in over three years, according to a closely-watched business survey.

IHS Markit’s monthly gauge of the manufacturing sector was unchanged at 50.5 in July–far below the eurozone average of 56.6 but above the 50 mark that separates growth from contraction.

Greece’s manufacturers have been lumbering in stagnation for the best part of the last nine years–falling back into contraction after an escalation of its bailout uncertainty last year.

But with GDP managing to grow steadily at the start of the year, the eurozone economy brightening, and the country returning to the debt markets for the first time since 2014 this month, things could finally be on the up for the Greek economy.

IHS Markit said output levels in Greek factories rose at the best pace in nearly two years while hiring levels enjoyed a third month of growth. But striking a note of caution, the survey found new orders were stagnant in May and foreign demand for Greek wares declined from June’s levels.

Greece’s big banks have been in crisis mode for a decade, starting with the global meltdown in 2007 and then the Greek debt drama, but are now on the way to completing the restructuring programs they agreed with the EU by the end of 2018.

Their biggest challenge is cleaning up their books because around half of their loans are bad, but here too, they’re making progress.