Households despair

Greek citizens are on the edge of despair! Even though the phrase seems excessive, it eloquently illustrates what the country’s households experience every day, which are not only the most pessimistic in Europe but also are expressing grim predictions for the future.

According to research on the economic situation conducted by the FEIR (Foundation for Economic and Industrial Research) in June, the consumer confidence index is significantly decreased and stands at the historically low level of -75 units.

“It was a month with many negative messages that have exacerbated Greek doubts as to the country’s ability to emerge soon from this difficult economic situation. At the same time, the political turbulence has further aggravated the negative climate since no particular expectations have been created.

Besides, the rising unemployment rate in the private sector of the economy has created even greater uncertainty within Greek households. Greek consumers remain the most pessimistic in Europe, where the average consumer confidence indicators are maintained almost unchanged, both in the EU and the Eurozone (at -11 and -9.8 respectively). In other European countries, (Denmark, Germany, Luxembourg, the Netherlands, Finland, Sweden) positive indicators are recorded, according to the FEIR.

The picture is painted in further detail below:

-The already dismal predictions about the financial position of households are aggravated further.
The negative estimates of Greek consumers ab the financial situation of households over the next 12 months have increased significantly in the worst performance within the last five months, the relevant units rolling down to -62.9 points (from -55.5). The percentage of Greek consumers who believe that their financial situation will deteriorate slightly or significantly within the next time period, has increased from 69% to 79%, while only 5% anticipates a slight or substantial improvement. The EU and Eurozone indicators stand at -6.1 and -5.8 units respectively.

-Even worse forecasts of consumer financial situation
Household projections on the financial situation of the country within the next 12 months are also compounded at -72.7 units in June. The consumer percentage that foresees problems rose to 83% (from 77%), while the percentage of those who are expecting a slight amelioration has gone down to 4% (from 7%). The relative indicators at the EU and Eurozone level remain unchanged at -13.1 and -11.1 respectively.

-All-time low for the intention to save
The greatest reduction for the fourth consecutive month in the intention to save within the next 12 months has reared its head, bringing the relevant index to a new historic low of -73.7 points (from -66.4). An overwhelming 87% of Greek households is unlikely to save within the next 12 months, while 12% declare it is fairly or very likely. The relevant indicators at the EU and Eurozone level are slightly lower at -5.9 and -8.2 points respectively.

-General predictions for the rise in unemployment
New highs for the consumer forecast index concerning unemployment predictors over the next 12 months, which stands at 90.5 points, suggesting that Greek consumers now unanimously expect a rise in unemployment within the next 12 months. Thus, 94% of households expect a slight or significant increase in unemployment when the corresponding indicators in EU/Eurozone are unchanged at 18.7 and 13.9 points respectively.

-Further weakening of the intention to undertake major purchases
The intention of consumers to undertake major purchases within the next 12 months (furniture, appliances, etc) once more will subside in June, with the relevant index reaching -70.1 points (from -66.9). The majority of Greek consumers (79%) expect to spend much less in the coming months, while only 4% have expectations for an increase in their savings. In other European countries, the indicators show mildly positive changes to -24.1 points in both the EU and the Eurozone.

-Strong upturn in inflationary expectations due to the increase of indirect taxation
The predictions about price increases indicate June as the month of highest prices for this year, as discussions on the introduction of new indirect taxation led to the relative price index forecasts for the next 12 months climbing from 26 to 42.5 points. Two thirds of consumers expect that prices will increase at the same or a faster rate, while 15% predict stability. In EU and the Eurozone, the corresponding indicators are decreased slightly to +26.1 and +24.7 units respectively, thus significantly deviating from the Greek index.

-The percentage of those who “have been indebted” is extended
Regarding the current situation of households in June, the percentage who believe that they have increased their savings is down for the fourth consecutive month, reaching 13%, while the percentage of consumers that “just get by” is reduced to 53% from 57%. The households reporting that they have been dipping into their savings is increased to 16% from 12%, while those who say that they are in debt have increased to 17% (from 13%).