Economic Climate in Croatia Approaching Highest Levels Since Joining the EU

The economic climate in Croatia once again approached its highest level since joining the European Union in August, supported by optimism in retail and industry, a monthly survey by the European Commission revealed on Wednesday.

The Economic Sentiment Index (ESI) in Croatia stood at 118.4 points in August, an increase of 0.3 points compared to the previous month. This brings it closer to the highest level since Croatia joined the EU of 119 points, reached in March.

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At the same time, expectations in industry and retail reached their highest level since Croatia joined the EU in the past month.

The index measuring expectations in retail increased by 4.5 points compared to July, reaching 18.6 points. Optimism in industry also significantly improved, with the corresponding index rising by 2.4 points compared to the previous month, also reaching the highest level since joining the EU, at 14.3 points.

The value of the index measuring expectations in the construction sector nearly doubled compared to July, jumping to 3.1 points.

However, consumer expectations in Croatia deteriorated the most, reflected in a drop of the corresponding index by 1.1 points, to minus 17 points.

There was also a slight deterioration in sentiment in the services sector, indicated by a decline of the index by 0.7 points, to 19.8 points.

Sentiment in the EU Stable Near Highest Level in 10 Years

At the level of the European Union, the ESI in August was 111.9 points, just slightly below the highest level in 10 years of 112.2 points, reached in July, according to calculations by the European Commission.

This result stems from unchanged sentiment in industry and among consumers, reflected in nearly unchanged values of the corresponding indices, at 5.4 and minus 2.3 points, respectively.

Expectations in the services sector improved slightly, with the accompanying index rising by 0.4 points.

In contrast, the index of expectations in retail sharply fell by 4.4 points compared to July, sliding to 1.6 points. Expectations in the construction sector also worsened, indicated by a drop of the index by 1.4 points, to minus 5.3 points.

Among the leading EU economies not in the eurozone, expectations in the UK significantly worsened, with a drop in the ESI by 3.6 points. In Poland, sentiment remained almost unchanged compared to July, the EC survey shows.

Slight Improvement in the Eurozone

The economic climate in the eurozone improved slightly compared to July, with the ESI increasing by 0.6 points, matching that of the EU.

The overall ESI thus followed the growth of the index measuring expectations in the eurozone industry. A nearly identical increase of 0.7 points was recorded for the index measuring expectations in the services sector.

However, sentiment in retail worsened the most, by 2.3 points, as did that in the construction sector, by 1.5 points.

Consumer confidence remained more or less at last month’s level.

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Among the leading eurozone economies, the Italian ESI jumped the most, by 3.6 points. France followed with an increase of the index by 1.7 points, and Spain with 1.4 points.

In Germany, the economic climate slightly worsened, with a drop in the ESI by 0.6 points.

A separate report by the EC on the business climate in the eurozone in August showed a slight improvement, with the BCI rising by 0.05 points, to 1.09 points. Expectations of managers regarding production improved significantly. Their assessments of stocks of finished products and production in the past period were also somewhat better.

However, assessments of export orders significantly worsened, the EC report states.