Prospects of the ICT sector in Greece

Study of the ICT sector in Greece: Current Situation and Future Trends
Deliverable 14: Prospects of the ICT sector in Greece-policy implications
On the basis of the latest predictions and recent estimations made by international
organizations and the Ministry of Finance, the Greek Economy will keep on growing at rapid
rates (3.8% or even more) during 2006 and 2007. This result is due to the strong domestic
demand, a strong increase of investments and the sustainable high rates of private
consumption. Concerning the foreign sector, exports are increasing at a higher rate in
comparison to 2005, whereas imports upturn significantly after their decrease in 2005. This
drift creates an environment of broad domestic demand for the whole range of products,
including the ICTs products.
3.2.1. The economic climate
These favourable conditions converge with the improvement of the economic climate of 2006,
which results on the basis of the Business & Consumer Surveys of IOBE (Foundation for
Economic and Industrial Research). In general, the behaviour of the Business Climate Index
(especially in Greece) follows the electoral cycle. Therefore, as long as the elections of 2004
were approaching the significant improvement of the expectations pushed the index high. At
the same time, conducting the Olympic Games was a unique and huge event that
characterized intensively the previous months. However, immediately after the Olympic
Games and despite the fact that the Greek Economy sustained its high growth rates, a
climate of reduced expectations prevailed. The deterioration of the climate could be
interpreted as an expected turn of the Pre-Olympic euphoria, which had fed high
expectations, that could not be satisfied in the short term. The fiscal adjustments that were
implemented, which showed that problems were more acute and required urgent changes,
contributed to this turn.
Thus, the Economic Climate Index in Greece was at a continuous drop since mid 2004, which
was intensified in 2005. However, the climate started to ameliorate at the end of 2005. These
trends were empowered during the first months of 2006, while they were further intensified
during the months that followed. Thus, the Index presents henceforth an ascendant course
and reached its highest level during the last couple of years in September. The improvement
of the economic climate is mainly attributed to the optimistic business expectations. On the
contrary, consumers are not optimistic, as their estimations remain intensely negative.
The improvement of the climate involves all sectors of the economy. In Industry, the
improvement stems from the estimated increase of demand, while the predictions for the
following months are also optimistic. In Manufacturing, the climate is at the same pre-
Olympic levels of euphoria and it is impressively improved. This improvement is intense in
Retail as well, as the predictions for the firm sales are optimistic. Services show a
October 2006
Observatory for the Greek IS 14