Greek economic mood climbs to two-year high in December

Tue Jan 15, 2013 9:37am EST

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* Economic sentiment index at highest level in 2 yrs
    * Improved readings in services, retail trade

    ATHENS, Jan 15 (Reuters) - Greek consumers grew more
optimistic about their economy in December as foreign lenders
agreed to keep financial aid flowing to the country, averting
the immediate risk of Athens leaving the euro, data showed on
Tuesday.
    The Foundation for Economic and Industrial Research (IOBE)
said its index - based on consumer confidence gauges and indexes
for business outlook in manufacturing, construction, retail and
services - rose by 5 points to 84.1 in December, the highest in
two years.    
    The euro zone agreed in December to disburse nearly 50
billion euros in aid to the debt-burdened country by the end of
March, after Greece carried out a bond buyback scheme aimed at
making its debt more sustainable.
    That was followed by ratings agency Standard & Poor's
raising Greece's rating to B-minus with a stable outlook from
selective default. 
    "The successful completion of the bond buyback and the
country's recent credit rating upgrade confirm a gradual
reversal of the climate internationally as well," IOBE said in
its monthly survey.
    In return for more aid, Greece needs to implement a series
of painful reforms, including tax hikes and wage and pension
cuts that have eroded living standards and intensified public
anger at the conservative-led coalition government.
    The completion of negotiations with the European Union and
International Monetary Fund lenders eased uncertainty among
Greeks about their country's future despite the burdens the
austerity programme has brought upon many, IOBE said.
    The decision to unfreeze aid also eliminated monetary
uncertainty "at least in the medium term," it added.
    Still, economic sentiment deteriorated in construction even
as the mood in manufacturing, retail trade and services
improved. Greek households remain the most pessimistic in
Europe, followed by consumers in Portugal and Cyprus.  
    "It should be noted that despite the improvement (in the
climate), consumer confidence remains at very low levels as the
fear of unemployment is strong," the survey said.
    With more than one in four out of work, Greece has the
highest unemployment rate in the European Union. The jobless
rate hit a new record of 26.8 percent in October as the economy
remains stuck in its worst post-World War II downturn.
    Earlier this month, IOBE predicted unemployment would rise
further to 27.3 percent this year, which is set to be the sixth
consecutive year of recession.
    It has also projected the economy would shrink 4.6 percent
in 2013, taking a slightly more pessimistic view than the
government, which expects the contraction at 4.5 percent.
    The rise in Greece's overall economic sentiment in December
was in line with an improvement in the broader euro zone reading
in the same month to 87.0.
    The IOBE provided the following data: 
************************************************************** 
                                                    YR AVERAGE 
                      DEC '12   NOV '12   OCT '12   2011  2010  
OVERALL SENTIMENT     84.1      79.0      75.8      77.6  79.3  
-industrial           83.6      80.4      81.0      76.9  75.8  
-services             55.8      52.5      52.2      61.7  63.6  
-retail trade         59.4      56.2      51.1      58.9  59.2  
-construction         35.6      51.1      58.3      34.2  47.4  
-consumer confidence  -72.1     -74.1     -77.5    -74.1 -63.4  
--------------------------------------------------------------
    source: IOBE
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