Lukewarm Expectations for Croatian Economy as Inflation Continues to Bite

Lauren Simmonds

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As Poslovni Dnevnik writes, this month, expectations for the Croatian economy have been rather rapidly stagnating. On the one hand, there is pessimism in the retail sector due to the overall reduced purchasing power of consumers, and on the other hand, there are also improved expectations in both the industry and the service sector(s).

The European Commission’s survey and the Economic Climate Index (ESI) in the Republic of Croatia rose by 0.2 points in June compared to the previous month of May, to 109.4 points.

The analysis shows that the mood in the retail sector has deteriorated sharply, the index for that sector sank by as much as 4.9 points, reflecting fears that high living costs and inflation could force citizens to save more and more. Consumer expectations, the index of which fell by 2.3 points, don’t really give a great deal of hope either.

On the other hand, the leaders of the industry and the service sector(s) showed increased optimism when it comes to the Croatian economy and expectations surrounding it at the beginning of the summer, and in their case the index grew by 1.5 and 1.3 points, respectively. The mood in the construction sector also improved slightly, with the index growing by 0.9 points.

Company leaders expect to hire more during the height of this summer season, and the EEI index rose to 7.2 points. They also estimate that business uncertainty is significantly more pronounced than it was back in May, which was reflected in the growth of the EUI index by 1.3 points.

Managers across the EU and the Eurozone expect weaker business than back during in May, which was reflected in a decline in the economic climate index by 1.7 and one point, respectively. Among the leading European Union economies, the economic climate index in the Netherlands fell the most, by 3.6 points.

They are followed by Germany and Spain with a drop in ESI by 1.9 points and Poland where it decreased by 1.5 compared to May, the report shows. Managers in both areas estimate that they will employ less in the coming months, and warn of increased business uncertainty.

For more, make sure to check out our dedicated business section.


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