Optimism in the Croatian business community does not wane. As shown by the results of the latest research by the Hendal agency, HLIPO (Hendal Leader’s Index of Business Optimism) in the first quarter of this year shows a significantly higher level of optimism than in the previous two quarters, although it was also in a boom phase during that time.
HLIPO was developed based on the renowned IFO Institute’s business climate index and is the result of research conducted on 400 economic entities located in seven key sectors of the economy. The Hendal agency’s research involves asking two key questions to each economic entity: how would you assess the current business situation and what are your business expectations for the next six months?
– This year is specific due to the holding of triple elections – parliamentary, European, and at the end of the year, presidential. Given that the state’s influence on the economy remains significant, it is expected that economic conditions have also reflected through the results of the HLIPO optimism index. Additionally, the macroeconomic forecasts of the Croatian National Bank from March 2024 project several conclusions for Croatia: improved expectations compared to the projection from December 2023, accelerated real growth in 2024 compared to last year due to more favorable outcomes at the transition to the current year, then employment growth and unemployment decline, inflation slowdown, etc. Therefore, the results are certainly expected when looking at the macroeconomic context, which is also visible in the position of the HLIPO index in the first quarter of 2024 compared to the fourth quarter of 2023 – comments Ana Kuković, senior project manager at Hendal, on the background of such a high level of optimism among Croatian entrepreneurs.
Concerns in the IT sector
However, optimism is not evenly present across all sectors of the economy. More optimism than at the beginning of last year is recorded by HLIPO in manufacturing, construction, trade, and tourism in the first quarter of this year. Conversely, there is less optimism in transport/services, energy, and the IT sector.
– It should be noted that two of these three sectors are seasonally dependent, and their results depend on the time of year. For example, transport/services achieve the best results during the summer months, so an increase in optimism in the sector is expected in the coming months. Similarly, the heating season is ending for the energy sector, leading to uncertain business expectations, especially considering the ongoing conflict on the Ukrainian battlefield. What particularly concerns us is the decline in results in the IT sector. We place great hopes on this sector (along with tourism), especially since we are used to good results in previous quarters. The likely reason is that we are a smaller market and can more easily compensate for the blows coming from global giants. On the other hand, in part of the IT industry, we have significant companies with global successes, so any declines and growth spill over. Mass layoffs in the IT sector worldwide have been ongoing since the beginning of 2022, but so far we have relatively well resisted this negative trend. Major tech companies like Meta, Amazon, Google, and Microsoft have laid off thousands of employees, as have other companies. Although we do not have precise data on the number of laid-off workers in Croatia, there is always work for quality developers, although it is assumed that layoffs will first affect employees in areas such as product testing, marketing, and sales. There is also the constant fear of the impact of artificial intelligence on the labor market, especially in this sector – explains Ana Kuković.
