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The index of business climate in Greece reported a steep deterioration in July for the fifth consecutive month, reaching 81.3 points (from 90.7 in June), according to a study of economic performance of the Greek Foundation for Economic and Industrial Research (ΙΟΒΕ).

According to ΙΟΒΕ, this is the lowest index level since October 2012. The negative trend is a result of the strong deterioration of business expectations in all areas, but also of the new, serious decline in consumer confidence.

As projected in the previous ΙΟΒΕ Newsletter, this situation is the expected outcome of the unfavourable, extreme economic developments that followed the referendum on 5 July, most of all the imposition of controls on the movement of capital in the banking system and the general political uncertainty. An unprecedented fact in modern Greek economy, capital controls' effects are still difficult to foresee at present, as they are still ongoing. What is certain, is that these effects come on top of an already withered economic activity and are leading to a deepening recession and rampant crisis in general.

ΙΟΒΕ is certain that if negative expectations are to be outlived, the first steps towards a return to growth must include active stabilising measures at all economic and political levels.

Here are some specific ΙΟΒΕ insights:

-    In industrial production, forecasts for the coming months deteriorated significantly, with the balance in stock assessments remaining at almost the same levels, whereas orders and demand are limited.

-    In services, current demand is estimated negatively, as well as short-term demand, while the assessments of the current state of business have deteriorated significantly.

-    In retail, assessments of current sales are pointing downward, as are the forecasts for short-term development whereas the level of stocks have decreased slightly.

-    In construction, forecasts for planned business activities are unfavourable, adverse employment forecasts are up.

-    In terms of consumer confidence, forecasts for the economic situation of households are negative for the next 12 months, as are projections for the country's economic performance, the unemployment trends, and saving attitudes.

Today the European Commission spokesman, Mina Andreeva, said that the EC has factored in the weakening of the Greek economy in determining the budgetary targets to be included in the new bailout package. This was actually a corroboration of the signal sent earlier by Commissioner Pierre Moscovici.

This is one of the clearest messages to date that the creditors are considering the possibility of reducing the primary surplus targets agreed earlier (1% in 2015, 2% in 2016 and 3% in 2017).

In a statement to reporters in Brussels, Mina Andreeva said that the Greek economy has "deteriorated significantly" in 2015, but failed to shed more light on the new targets.

Andreeva added that the European Commission actually refers to the opening of the Athens Stock Exchange after a five-week break, but did not comment on the slump at the session's very start.

We would like to point out that, according to the EC, Greece's GDP will decline this year between 2% and 4%.