Sentiment in the Croatian economy worsened in June

Sentiment in the Croatian economy worsened in June, reflecting a wave of pessimism in the industry and service sector due to expected weaker demand, a survey by the European Commission showed on Thursday.

The Economic Sentiment Index (ESI) in Croatia fell by 2.7 points in June compared to May, to 105.5 points, according to the EC report.

The sentiment worsened the most in the service sector and industry.

Managers in the service sector report a noticeable decline in demand over the past three months, and expect it to weaken further in the period from July to September. Industry managers also report weak domestic and foreign demand, higher inventories, and expect a decline in production as well as selling prices.

A noticeable decline in sentiment was also recorded in retail, reflecting managers’ forecasts of lower selling prices and a smaller volume of goods orders.

In the construction sector, sentiment remained unchanged compared to the previous month.

Among consumers, a slight optimism prevailed, reflected in a rise in the index by 1.3 points, which reflects expectations of an improved financial situation for households in the next 12 months and better opportunities in the economy.

Business leaders expect to hire significantly less, according to a decline in the Employment Expectations Index (EEI) compared to May by 2.9 points.

The survey also showed almost unchanged expectations of uncertainty in business compared to the previous month.

Slight deterioration in the eurozone and EU

The economic climate in the eurozone and EU has only slightly worsened in the past month, reflected in a decline of the ESI by 1.1 points compared to May.

Sentiment worsened the most in the construction sector and industry, reflected in a decline of the index by about two points. Increased pessimism was also expressed by managers in the service sector and retail.

Consumer expectations have slightly improved in both areas, with an increase in the index of just over one point.

Managers in both areas do not plan to significantly change the pace of hiring, and estimate that uncertainty in business has slightly subsided, according to a decline in the Uncertainty Index (EUI) by 1.2 points in the eurozone and by 1.1 points in the EU.

Gloomy Germany

Among the leading economies in the eurozone, sentiment has marginally improved only in France, where the ESI rose by 0.8 points.

Germany, on the other hand, recorded a noticeable deterioration, reflected in a decline of the index by 1.9 points.

A slight deterioration in sentiment was also noted in Italy and Spain, according to a decline in the index by 1.1 and 0.9 points, respectively.

In Poland, the largest EU economy not in the eurozone, sentiment remained unchanged compared to May, the EC survey shows.