Surplus Logs, Glassworks Closures, and Full Wine Cellars

As they say: even the oldest economic chroniclers do not remember a surplus of logs appearing in Croatian forests. A decrease in demand in export markets has led some processors to abandon taking logs that were guaranteed to them by quotas. Signals of reduced demand are also coming from logistics companies. Most are feeling a drop in traffic, so what was previously overbooked has now become a fierce battle for every container. On the other hand, news is circulating in glassmaking circles about the closure of many glassworks. And to justify this, there is news of full wine cellars across France, raising the question of why to spend money on a new grape harvest this autumn. News similar to this has been arriving more frequently in recent months. As is often the case, when the scale of deterioration is not crystal clear, there are always those who, legitimately, ask the editorial offices of business media like Lider the same questions: Do you have to publish bad news? Why are you pouring oil on the fire?

**Dark Clouds**

The answer is always the same. We are aware of our role in shaping the sentiment of the business community. But that does not mean we should beautify reality. Entrepreneurs and managers are the last type of readers who could be misled. In conversations with suppliers or customers, if they themselves do not yet feel the cooling of the economic climate, every responsible businessman will receive signals about what is happening. Business media that cannot find a balance between positive and negative news that corresponds to the state on the ‘battlefield’ lose credibility. The future will not be better if information that is not the most pleasant is not opened and contextualized. Similar to medicine. A patient will not get better if their diagnosis is concealed.

—

—

And the diagnosis for the global, European, and ultimately Croatian economy is not the best. It does not mean that a severe recession is immediately around the corner. For now, the world’s financial power centers are juggling to maintain some balance between excessive money printing, inflation, interest rates, and the consequences of deglobalization. But dark clouds are on the horizon. Global trade grew by only 0.3 percent in 2023. The International Monetary Fund estimates a growth of global trade in 2024 of three percent. But the assumptions for this to happen are very shaky. For comparison, the historical average growth rates of global trade are 4.9 percent! When global trade grows by 0.3 percent, and global GDP by 3.2 percent, it is clear to even a layman that something is wrong. That there are doping means that artificially stimulate growth. And that this monetary doping has a price and an expiration date. For now, signals of reduced orders and unfilled capacities are mainly coming from the industrial sector. Therefore, many local advocates will surely rejoice that Croatia does not need reindustrialization. Because, look, there are problems in industry. We have tourism and EU funds that allow us to grow by maybe three percent a year. However, there is one catch in such an approach. Sooner or later, the decline in industry, due to its largest multiplier, will spill over into services. Entrepreneurs and managers who do not want to take this into account are taking a big risk for the future of their companies. Those who do not turn a blind eye to warning news and analyses in business media may be less victims or even winners when the stormy weather passes. Experience from previous recessions can confirm this.

Two Instructive Examples

Here are two examples. At one of Lider’s conferences in 2017, an entrepreneur approached me, introduced himself, and thanked me for saving his company and family through reading Lider. Compliments are always nice, but these seemed a bit exaggerated. Then the man explained: ‘You wrote in 2008 that a crisis could come, and when it did, you assessed that it could last for several years. This helped us decide to postpone a major investment. If we had jumped into it, by 2013 the company would have gone bankrupt, and we would have lost the house we planned to mortgage. We built the plant after the recession.’

The second example is the opposite. An entrepreneur recounted that he did read our warnings, took them seriously, but did not give up on borrowing and investing. He was willing to take the risk. A pre-bankruptcy settlement saved him from bankruptcy during a six-year recession. It cost him his health and family relationships, but when demand began to recover, he had the most modern plant and was a step ahead of the competition.

Based on such experiences, we at Lider are not in doubt. We neither want to beautify reality nor be catastrophic. Our readers know how to read the signals from the market that we find, weigh, contextualize, and strive to be useful to the business community in this way. The decisions are, of course, only theirs.