Survey on the Economy 2003 GREECE Prepaired for the EUROCHAMBERS from the Union of Hellenic Chambers and TNS ICAP Α.Ε

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 2001 was characterised as a year of change, challenge and accomplishment for the Greek economy. After the accession of our country to the ENU and the adoption of common currency since January 2001, the economy operates in a new environment that ensures high price stability and promotes the financial growth. In this context, it was not surprising to find business confidence in very levels in Greece and the predictions of the entrepreneurs for 2002 were very optimistic in terms of turnover and investments which in turn were fuelling overall business confidence and optimism. However the unfavourable international financial developments that did influence Greece as well (even though the overall impact was relatively restricted and balanced from other factors) as well as the practical application of Euro through its use in everyday transactions had a negative effect on the Greek enterprises. As evident from the research results the optimism for 2002 did not prove itself and thus all the ¨ real¨ indicators for 2002 are in much lower levels than the ones that the businesses were foreseeing.

2. Main findings More specifically 1 out of 2 businesses state that the influence of general business conditions on their firm was unfavourable and this statement leads to a negative balance for business confidence. Small companies seem to have suffered more since they are the ones to present the smallest balances. The results of the research indicate that Greek businesses remain cautiously optimistic for 2003. Thus all the economic indicators are (even marginally in some cases) positive. Business seem to place their efforts for recovery by increasing their local sales and exports thus increasing the total turnover.

3.1 FINANCIAL INDICATORS Total Turnover In relation to total turnover we could say that 2002 was an average year . Almost 1 out of 2 (49%) businesses state that their total turnover increased whereas for 1 out of 4 (24%) 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 2003 businesses in Greece appear to be quite optimistic since they predict an increase of their total turnover thus leading to a net balance of +45%. For both sectors the net balance is above +40% (+42% and +49%, respectively). Notably only a 10% of the businesses from the manufacturing sector and a 13% from the service sector forecast a decrease of their total turnover for 2003.

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 (+63%), followed the mid-sized companies (+48%) while the smaller companies are at a lower (+38%) net balance. The reserved optimism of the small companies seems to have its source at the 2002 results since 3 out of 10 ( 32%) small businesses saw their total turnover to shrink in relation to 2001 whereas for 1 out of 4 (25%) the expected increase did not come. Therefore for the small companies the net balance is at +8% and are those companies that drop the total net balance for 2002. However it is worth to point out that only a 13% of small companies foresees a decrease for 2003. *Company size is determined by the number of personnel

3.2 FINANCIAL INDICATORS Domestic Sales For 2001 businesses forecasted an increase in their domestic sales for 2002 and the net balance was at +48%. These forecasts did not come true and thus the ¨actual¨ net balance for 2002 is at much lower levels and specifically at +17%. The 2002 net balance for domestic sales presents important fluctuations depending on the size of the company. Thus for small companies the net balance is marginal (+3%) and it is these companies that lead the total net balance to be at +17%. On the contrary the balance for middle and large companies is approximately at +30%.

3.2 FINANCIAL INDICATORS Domestic Sales Greek companies appear to be cautiously optimistic regarding their domestic sales. Thus the net balance for the upcoming year is at +37%. This balance is enforced more by the service sector (+46%) in relation to the manufacturing (+33%) Small companies appear quite optimistic for their domestic sales in 2003. More specifically 1 out of 2 small companies expects an increase in sales and thus the balance is at +28%. Respectively 6 out of 10 middle -sized and 7 out 10 large companies expect their income from sales in Greece to increase in 2003 and thus the balances are positive (+43% and +63% respectively).

3.3 FINANCIAL INDICATORS Exports 30% of the companies that were asked confirmed that they have exporting activity. Among these companies the vast majority (82%) belongs to the manufacturing sector. The companies that have exporting activity make a quite positive forecast for their exports in 2003, since from +31% at 2002 increases at +52% for 2003. Balance

3.4 FINANCIAL INDICATORS Employment 1 out of 2 businesses state that the number of employees for 2002 in relation to 2001 has remained constant. On the contrary 3 out of 10 businesses (32%) state that the number of employees has increased whereas for the 18% of the businesses it has reduced. Thus the net balance is at +15%. The forecasts for 2003 are not different in relation to 2002 proving that changes in demand are not very likely. Thus the net balance climbs from +15% to +17% in 2003. 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 +11% whereas for the services is at +26%.

3.5 FINANCIAL INDICATORS Investment Even though the forecasts for 2002 were quite optimistic and the balance was at +40% in reality the balance for 2002 was at a much lower level and more specifically at +21%. More specifically the 36% increased their investments at 2002, the 47% of the companies kept them constant whereas the 15% made a reduction in investment. The balance for 2003 does not present great difference since it is at +27% a fact that shows that businesses do not foresee an important change in this area.

3.5 FINANCIAL INDICATORS Investment For 2002, 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 +16%, increases at +26% for medium and at +28% for large businesses. For 2003 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 Businesses predicted that 2002 would be a very good year for them. Unfortunately this prediction did not prove to be correct for Greek businesses since only a 16% state that the influence of general business conditions on their firm was positive. On the contrary 1 out of 2 businesses state that the general conditions had unfavourable effect on their firm. Thus the net balance is at -35%. Businesses seem more optimistic for the 2003 since 3 out of 10 state that the general business conditions will have a more favourable impact on their firm . The total balance is at marginally positive levels. As it was expected small companies are less optimistic and thus the balance for these businesses is negative for 2003 (-10%) whereas for medium and large companies it is at +14% and +8% respectively.

METHODOLOGY The Economic Survey 2002 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 15th to October 18th. 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 2002 - GREECE DATA

APPENDIX QUESTIONNAIRE

APPENDIX ANALYTICAL RESULTS