December the 19th, 2023 – The overall Austrian view of doing business in Croatia next year is resoundingly positive.
As Poslovni Dnevnik/Marija Brnic writes, approximately 800 Austrian companies have branches of their businesses operating within Croatian borders. According to the regular annual survey conducted among them, 2024 will not be a bad year for doing business in Croatia in their eyes.
Moreover, compared to previous years, expectations are overall more positive regarding doing business in Croatia, which is significant. This is because the survey taken among Austrian business owners was conducted under the conditions of less than favourable economic trends this year. On top of that, there were all kinds of less than amazing assessments given by financial institutions for the economic perspective of Croatia, Austria and the majority of the EU for 2024.
Eurozone accession was positive for doing business in Croatia
According to a survey conducted by the Austrian Foreign Trade Office in Zagreb, most expect the same or even better results doing business in Croatia in 2024. To be exact, 51% of those asked expect equal results, 11% believe they’ll see an improvement, and 7% provided no answer either way.
Less than a third (31%) of Austrian enterprise owners expect economic conditions to worsen overall in 2024, while 39% of them had those same pessimistic estimates for this year in the previous survey done in 2022. In the evaluations recorded in 2023, the results are overall better than in last year’s survey.
“More than 70% of Austrian companies operating in Croatia rate the economic development in 2023, compared to the previous year, as good or better,” summarised the results of the survey, as explained by the new director of the Austrian Office for Foreign Trade, Gerhard Schlattl. Specifically, only a quarter of them believe that the situation worsened during this business year, while a third of respondents gave the same assessments last year.
Increases were recorded across all key criteria, from the number of employees and orders, to total revenue and the utilisation of capacities. This, as duly noted by Schlattl, was the case despite numerous factors that influenced the growth of some costs, such as labour costs, raw materials and taxes. An increase in traffic was recorded by 65% of businesses, there was an increase in orders by 47%, capacity utilisation by 44%, and the number of employees by 42% of those surveyed.
Most companies rate Croatia’s Eurozone accession as good for doing business in Croatia (54%), even though it represents an increase in costs (53%). Converting their prices from kuna to euro greatly resulted in an increase in prices (19%), and more than a quarter of those surveyed pointed out that the euro simplifies and lowers the cost of doing business in Croatia, as well as investing here.
Austrians have also noted progress this year in regard to the labour law, political stability (68%) and the predictability of economic policy (47%). All of the aforementioned is naturally positive for business, and they also praised the availability of local suppliers and their quality, as well as infrastructure, digitisation and payment morale.
Unlike in the past, the current key risks are external
According to the largest number of respondents, the key risks for further business aren’t Croatian domestic issues, but rather geopolitical problems from outside, such as the war between Russia and Ukraine, the danger of greater distancing between the East and the West, the strengthening of economic sanctions, protectionist measures and the displacement of existing trade flows and transport routes.
As far as Croatia itself is concerned, the research shows that according to all important indicators, Austrian companies are overall very optimistic for next year, especially in terms of orders and total turnover, for which 36% of companies expect an increase. In terms of investment volume, there are an equal number of those who expect a positive and a negative shift (18% each), that is, the majority don’t particularly expect any changes in 2024 compared to this year.
It’s worth noting that the largest number of Austrian companies that participated in the survey generate significant revenues. Almost half of them bring in more than 11 million euros, and are mainly engaged in service activities (56%).