The expectations of management consultants for the course of the Greek economy in the next 12 months have deteriorated, according to the results of the Association of Management Consultancy Firms' Barometer for the economy.

Specifically, the general GRe+1 index, which is the average of economic sentiment and production factor indicators, stood at 15.4% at the end of the third quarter, up from 22.3% the previous quarter. The annual decline is much larger. In the third quarter of 2023, the relevant index was 25.8%. The deterioration in expectations is almost equally attributable to both components of GDP+1, i.e., both the estimates of economic fundamentals and those of production factors.

Note that in the third quarter, the average difference between the "positive" and "negative" response rates for the five variables of the economic sentiment index (economic growth rate, unemployment, private fixed capital formation, exports and the rate of change in the general price level) decreased to 21.8% from 28.2% at the end of the second quarter of 2024. In fact, the decline was much larger compared to the third quarter of 2023, when the index was 52.0%.

THE EURO AREA

Estimates of the economy's growth rate, which are probably related to worries about the performance of the major euro area economies, were the main cause of the third quarter's decline compared to the previous quarter. It is also due to persistent inflation estimates and private investment. In contrast, there was a slight improvement in expectations for unemployment and, to a greater extent, for exports of goods and services. A similar picture emerges from the comparison with the third quarter of 2023.

In the third quarter, as in the second quarter of 2024, the decline in optimism in management consultants' expectations for the development of the factors of production over the next 12 months was more pronounced than that for economic fundamentals. The average difference between "optimism" and "pessimism" for the variables of the factor of production index (human resources, financing conditions, public infrastructure, entrepreneurship and institutional framework) became single digit, 9.0%, down from 16.4% in the previous quarter. The decline was even more pronounced compared to the third quarter of 2023, when this difference was 23.1%. The deterioration in expectations applies to all variables.

QUARTERLY BASIS

On a quarterly basis, the largest decline was in expectations for entrepreneurship and public infrastructure. However, it should be noted that in all five variables, the majority of consultants believe that there will be no significant changes in the next twelve months.

In terms of inhibitors to entrepreneurial activity, the three main ones continued to be related to weaknesses in the public sector. The functioning of the judiciary is second, then inefficient public administration. In third place are the discontinuities observed in the functioning of the state. This is followed by the obstacles raised by the tax regime, i.e., its frequent changes and high taxation.