Moderate Optimism in the Croatian Economy at the Beginning of the New Year

Expectations in the Croatian economy have moderately improved in January, marking the fifth consecutive month of improvement, reflecting optimism in the service sector following strong business results at the end of 2023, according to a monthly survey by the European Commission released on Wednesday. The Economic Sentiment Index (ESI) in Croatia rose by one point in January compared to the revised value in December, reaching 110.2 points, which adjusts data for all countries at the beginning of the year.

The greatest optimism was expressed by business leaders in the service sector, with a significantly better assessment of business performance in the last three months of 2023, which raised the index by 2.3 points. Managers in the industry, on the other hand, expect significantly better sales prices and increased production, following a weaker trend in previous months, resulting in a sector index increase of 1.2 points compared to December. There was also a slight improvement in sentiment in the construction sector and among consumers, reflected in an index increase of 0.7 and 0.6 points, respectively. A wave of pessimism was only expressed by retail managers, who plan to significantly reduce orders and foresee a weaker business situation in the coming months, following good results at the end of 2023.

Business leaders expect to hire significantly more workers in the coming months, according to an increase in the Employment Expectations Index (EEI) of 4.4 points. They also estimate that business uncertainty is significantly more pronounced than at the end of 2023, as evidenced by an increase in the Uncertainty Index (EUI) of 2.3 points.

Optimism in Italy

The economic climate in the eurozone and EU has almost stagnated at the beginning of the year, the Commission’s survey showed. The greatest improvement was recorded at the end of the year in the service sector, whose index rose by 0.4 points in the eurozone. In the EU, it remained almost unchanged. Industry and retail leaders in both areas had a similar sentiment to December. However, expectations in the construction sector significantly worsened, indicated by a decline in the index of 0.9 points in the eurozone and 1.5 points in the EU.

A wave of pessimism also affected consumers in the eurozone, as evidenced by a one-point decline in the index compared to December. In the EU, their sentiment was almost unchanged compared to December.

In such conditions, managers in the eurozone and the EU plan to slightly reduce the pace of hiring, according to a decline in the EUI of 0.8 and 0.7 points, respectively.

Business uncertainty was only slightly alleviated compared to December, as reflected in a decline in the EUI of 0.3 points in both the eurozone and the EU.

Among the leading EU economies, sentiment improved the most in the Italian economy, according to an increase in the ESI of 3.8 points. Poland follows closely with an index increase of 3.2 points. Notable improvements were also recorded in France and Spain, whose indices rose by 2.4 and 1.4 points, respectively. In Germany, the largest European economy, sentiment significantly worsened, as indicated by a decline in the index of 2.2 points.