Day of Great Plans – Entrepreneurs: Optimism Will Last Longer Than Three Years, Even Five

During the conference Day of Great Plans, a round table was held – Forecasts for 2017 – opportunities and dangers. In the last few quarters, positive shifts can be seen in Croatia, indicating a period of economic growth, including banking and loan placements.

– I expect that in the coming years, these positive trends will be visible. Croatia has great potential that has not been sufficiently utilized so far. Much more can be leveraged from the European Union, but the first years of membership are always slower. However, it is accelerating, and this is already evident. Inflows of money from the EU will increase. All events in the economy in recent months indicate that a period of optimism is ahead, even our chief economist Hrvoje Stojić, who I find a bit unrealistic, has changed his forecasts – said the head of Addiko Bank, Mario Žižek.

When asked where he, as a banker, will make money in a time of low interest rates, he responds that banks earn similarly in all markets. Interest rates on deposits were high, now they are falling. Bank margins are almost always the same.

– Personally, I expect that interest rates will remain at these low levels for some time, and now is the time to invest – said Mario Žižek, CEO of Addiko Bank.

The time has come when we all must accept continuous change as a normal part of business. The bank’s credit policies are now changing twice a month, rather than twice a year as was done until recently.

– The market demands it. It must adapt to market conditions and become better for clients. Another important element is sentiment. Indicators are a real basis for decision-making. However, sentiment, a positive approach to investments carries enormous weight. If sentiment turns, everything else will go well. Then you can ride a positive wave that can last a long time and can be in the interest of all involved – says Žižek.

Žižek’s colleague from Raiffeisen Bank, Ivan Žižić, also shares the optimism.

– We have noticed the beginning of an investment cycle in companies. Not only is credit activity increasing, but interest rates are falling. They will continue to fall. Banks are also reducing margins, which gives an impulse to companies – emphasized Žižič.

When asked how entrepreneurs can count on stability when everything is changing rapidly, he responds that this primarily works to their advantage, rates are falling and are expected to remain low for a long time, not only in foreign currencies but also in domestic ones.

– Clients have become aware of both interest rate risk and currency risk. Housing loans are increasingly being placed in kunas. Entrepreneurs have adapted quite a bit to the situation. They are more cautious and conscientious. This is evident from the credit applications. We see fewer high-risk projects, and we are receiving more well-developed projects – says Ivan Žižić from RBA.

After the bankers, who are key to the economy, entrepreneurs explained their views and perspectives on the situation in the coming year. When asked if they have felt cheaper interest rates, whether banks behave differently, and if they offer better conditions, Denis Matijević from Agrofructus said that sentiment is very important.

– It is often forgotten in the relationship between bankers and entrepreneurs. I can say that we do feel a positive shift in relation to bankers. Fellow entrepreneurs say that this is just the beginning. Are we producing what the customer wants? Agrofructus is the organizer of the relationship between producers and buyers. We must produce what is competitive, and everything that the market demands is a long-standing misconception. We have fallen on that test several times. Can our producers be competitive? They can. I am glad that Mr. Plenković particularly emphasized agriculture, I am pleased with the positive trends, but we must not get carried away. We are facing a serious investment cycle in agriculture. We have had two such cycles in the last 15 years, but the money went in the wrong direction. We should not repeat the same mistake. A strategy needs to be defined in the short term – said Matijević.

Entrepreneurs are quite encouraged by the announcements and statements of politicians.

– I am encouraged by statements about the predictability of the tax system. Do I trust the authorities? I do not trust, but I am encouraged by the announcements. All EU countries have plans, especially those in the excise segment. In Croatia, excise duties account for five percent of the budget, and predictability is extremely important. I have confidence, but I would not develop a strategy based on statements. We see potential in Croatia and will continue to operate here and develop. Our business plans depend on the regulatory framework, and I hope it will be such that we can develop quality strategies – said Anita Letica from Philip Morris.

Gianni Rossanda, CEO of Uljanik, said that he expects the state to resolve labor force issues in the future.

– We are all focusing on higher education. We have heard that greater emphasis will be placed on secondary schools. The absurdity is in the retraining we are doing, which involves retraining people between the ages of 25 and 30. We must work on bringing back those who have left. Wages are not the only problem; people value continuity and security. Import quotas? They must be a solution and are necessary for the transitional period. It takes time to educate people. We need to know quotas not for the next year, but for three years. There must also be flexibility. Today, it is difficult to predict what we will need in June next year – said Rossanda.

Pavo Zubak, head of AutoZubak, said that when talking about the market and the crisis that has lasted for several years, it is no longer a crisis but a real state.

– We see a slight recovery. Primary buyers have reached 33 percent of purchases. Growth in Croatia and the region will be around 4 – 5 percent. The state framework and the atmosphere in society are important to us. Politicians must deliver that atmosphere and create a stable environment – said Zubak.