Business Optimism Grows in Europe

Entrepreneurs from the EU have recovered from the shock caused by the announcement of the referendum results in the United Kingdom. Therefore, for the second consecutive month, after declines in July and August, an increase in the business sentiment index has been recorded. Moreover, the monthly value of the index at the EU level in October was the highest this year.

When observed by sectors included in the research, October was marked by favorable movements in business sentiment across all sectors, except for consumers. There is no specific explanation for the slight negative trend in consumer sentiment other than the mild recovery of crude oil prices in the global market, which, if this trend continues, could lead to an increase in the general price level. The final assessment for the industry and construction sectors is still in the negative, but this negative is the smallest this year, the business sentiment in the service sector has returned to the level at the beginning of the year, retail is characterized by reduced optimism compared to the first quarter of this year, and the financial sector shows the highest level of optimism this year.

“The growth of the business sentiment index in the EU continues for the second month in a row, with trends in Croatia not only converging with those in the EU but also being more positive in terms of duration,” claims Zvonimir Savić, Director of the Sector for Financial Institutions, Business Information, and Economic Analysis at HGK.

When observed by EU member states, the trends were not uniform, as in ten member states the business sentiment index for October was lower than in the previous month. Among these member states was not the United Kingdom, where business sentiment also returned to a level close to the beginning of the year. At the same time, Croatia was among the few member states where the trend of now five months of index growth continued, or among the few member states whose business sentiment did not worsen after the announcement of the referendum results. The business sentiment index for October, like that for the EU, was the highest this year, and the greatest influence on such movement among the observed sectors came from positive trends in business sentiment in construction and industry.