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Economic Barometer – Consumer Climate Index (CCI) – March 2013

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The main characteristic of the relative recovery seen since January is the cautious optimism expressed by citizens regarding the long-term outlook for the economy, in contrast with the extremely negative assessments of the current economic situation. However, despite the improvement in recent months, consumer confidence is still markedly lower than the levels recorded before the signing of the Memorandum.

The Consumer Climate Index – CCI (60.5) rose slightly (+3.3 points) relative to February. The increase recorded this month and its stabilization at around 60 points since the beginning of the year serve to confirm the improvement compared to the levels of last autumn.

The Current Economic Conditions Index – CECI (42.3, +4.2 points relative to February) rose for the third consecutive month and surpassed the 40-point mark for the first time since September 2011 (42.1). At the same time, the Consumer Expectations Index – CEI (72.6) appears to be stabilizing at levels above 70 points in the last three-month period, registering a marginal increase (+2.8 points) relative to the previous month.

Looking at the values of the above three indices, one may observe the following: First, the Consumer Expectations Index (CEI) remains at steadily higher levels than the Current Economic Conditions Index (CECI), highlighting the fact that whilst citizens are more optimistic about the future of the economy, they are not satisfied with the current economic situation. Second, the divergence between the two indices (CEI and CECI) has become constantly more pronounced since autumn 2011.

More specifically, the average divergence of the two indices is estimated at just 12.2 points in the period 3/2011-10/2011. Thereafter, it increased to reach its highest level in January 2013 (38.7 points). Since then, it has remained steady at over 30 points. Third, the evolution of the Consumer Climate Index (CCI) is to a large extent determined by the evolution of the Consumer Expectations Index (CEI). The close correlation between the two indices may be attributed to the greater weight of the CEI in the calculation of the CCI, since the CEI comprises three (3) separate variables compared to just two (2) in the case of the CECI. A further explanation for the above phenomenon is the higher volatility of the CEI compared to the relatively smooth evolution of the CECI.

Propensity to buy (68.8) reached its highest levels of the past 17 months (9/2011-3/2013). Short-term expectations for the economy (60.2) fell significantly (-4.9 points), in just one month, whilst the total losses of the relevant index reached 11.1 points relative to January 2013. In contrast, long-term expectations for the economy (111.2) rose considerably (+7.8 points) compared to the previous month and it is of some importance that this index stabilized at levels of over 100 points for the fourth straight month, which means that the majority of citizens continue to be optimistic only about the economy’s long-term prospects.

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