Survey on the economy Greece 2004 Prepaired for the EUROCHAMBERS Date: November 5th,2003 TNS ICAP 64, Vas. Sofias Ave., Athens 11528 T: (+30)210 7260600 E: tnsicap@tnsicap.gr GALLUP INTERNATIONAL ASSOCIATION

TABLE OF CONTENTS 1 . Greece in Figures 2. Key Findings 3. Economic Indicators 3.1 Total Turnover 3.2 Domestic Sales 3.3 Exports 3.4 Employment 3.5 Investment 3.6 Business Confidence 4. Methodology APPENDIX

1. GREECE IN FIGURES The macroeconomic indicators of the Greek economy, as can be seen from the following table, show the progress of the Greek economy over the past 6 years. All the key indicators, in total and each one progressively over time make apparent the growth, the evolution and the future of the Greek economy

2. Main Findings 2003 was an average year for the Greek businesses. The continuing drop of the stock exchange, the war in Iraq and the uncertainty for the future developments as well as the actual use of the Euro in everyday transactions had a negative impact on the Greek companies. More specifically 1 out of 2 businesses stated that the influence of the general financial conditions that prevail in the market had a negative effect over their business. This statement contributed to a negative balance for the business confidence. Small companies seem to have suffered more since they are the ones to present the smallest balances. Research results indicate that Greek companies are optimistic for 2004 possibly due to the Olympic Games that are expected to increase business transactions. Thus all the financial indicators for 2004 and positive. Business seem to place their efforts for recovery by increasing the local sales (6 out of 10 state that they expect increase in sales) thus increasing the total turnover as well.

3.1 FINANCIAL INDICATORS Total Turnover Almost 1 out of 2 (51%) businesses state that their total turnover increased whereas for 1 out of 4 (26%) state that it remained constant. Respectively for the same proportion of businesses (1 out of 4) there was a reduction in their total turnover. Therefore the net balance is at +24%. No differences are observed among the different sectors. For 2004 businesses in Greece appear to be quite optimistic since they predict an increase of their total turnover thus leading to a net balance of +50%. For both sectors the net balance is positive (+49% and +52%, respectively). Notably only a 12% of the businesses from the manufacturing sector and a 10% from the service sector forecast a decrease of their total turnover for 2004.

3.1 FINANCIAL INDICATORS Total Turnover Optimism about the company´s total turnover is clearly linked with the size of the company. More specifically the bigger the company the greater the optimism. Thus large companies are the most optimistic (+67%), followed the mid-sized companies (+63%) while the smaller companies are at a significant lower (+34%) net balance. * Company size is determined by the number of personnel

3.2 FINANCIAL INDICATORS Domestic Sales 1 out of 2 companies (49%) stated that domestic sales increased whereas 1 out of 4 (24%) stated that they remained constant. The same proportion has seen their domestic sales to drop during 2003. Businesses appear to be very optimistic for their domestic sales in 2004. Thus 6 out of 10 state that they expect an increase in the domestic sales. Thus the balance is at a +45%. The service sector expresses greater expectations (+52%) in relation to the manufacturing sector (+40%)

3.2 FINANCIAL INDICATORS Domestic Sales The 2003 balance of domestic sales varies according to the company size. Thus for small companies the balance is at +34%. On he contrary for medium sized and large companies the balances are at +53% and at +59% respectively.

3.3 FINANCIAL INDICATORS Exports 26% of the companies that were asked confirmed that they have exporting activity. Among these companies the vast majority (86%) belongs to the manufacturing sector. The companies that have exporting activity make a quite positive forecast for their exports in 2004, since from +19% at 2003 increases at +37% for 2004. Balance

3.4 FINANCIAL INDICATORS Employment Almost 1 out of 2 businesses (55%) state that the number of employees for 2003 in relation to 2002 has remained constant. On the contrary almost 3 out of 10 businesses (28%) state that the number of employees has increased whereas for the 17% of the businesses it has reduced. Thus the net balance is at +11%. The forecasts for 2004 are not different in relation to 2003 proving that changes in demand are not very likely. Thus the net balance climbs from +11% to +18% in 2004. By examining the trends per sector we observe that the manufacturing sector presents a much lower balance in relation to services. Thus the balance for the manufacturing sector is at +10% whereas for the services is at +29%.

3.5 FINANCIAL INDICATORS Investment The balance for investment was for 2003 at a +27%. More specifically 38% of businesses increased their investments, 51% kept them constant (in relation to 2002) whereas 10% made a reduction in investment. The balance for 2004 does not present great difference since it is at a +34% level, which means that companies do not expect a significant change in this area.

3.5 FINANCIAL INDICATORS Investment For 2003, as is evident for the research results, the size of the business influences considerably investment. More specifically, although for small businesses the balance is at +18%, increases at +36% for medium and at +35% for large businesses. For 2004 the number of businesses that foresee increase in investment is larger that the number of those who foresee reduction. This belief is stronger among medium and large businesses in relation to small ones.

3.6 FINANCIAL INDICATORS Business Confidence 2003 was not a good year for the Greek businesses. Thus the 51% of businesses stated that the effect of general business conditions had a negative effect on their business. Businesses appear more optimistic for 2004 since 4 out of 10 state that the general business conditions will influence positively their company. The total balance is at relatively high levels (+19%) considering the 2003 balance (- 29%). As expected small companies appear less optimistic. For these companies the balance is marginally positive for 2004 (+5%) whereas for the medium sized the balance is at +32% and for large companies is at +19%. Moreover the service sector appears more optimistic given that the balance is at +26% whereas for the manufacture the balance is just +14%.

METHODOLOGY The Economic Survey 2003 was conducted by the Union of Hellenic Chambers in cooperation with the TNS ICAP AE for the Eurochambres. The interviews were conducted via telephone from October 21th to October 27th. The sample consisted of 400 companies belonging to the industrial and service sectors. The interviews were conducted with the Finance Directors of the companies during office hours. The sample structure was based on the activiey and size of the company. With respect to the company´s activity, and according to the guidelines of the Eurochambres, the companies belonged to the industrial and service sectors. Company size was determined by number of employees. Small companies were defined as those with 1-9 employees, medium-sized companies were those with 10-49 employees and large companies employed 50 or more persons. Stratified sampling was used. The sample is representative of the universe of Greek companies as they appear in ICAP´s database. The sample was weighted by sector and size of company so that results reflect the actual distribution in the universe.

Appendix EES 2003 – GREECE DATA

Appendix Questionnaire

Appendix STATISTICAL TABLES