Expectations for the Croatian economy slightly improved in December 2020, reflecting a wave of optimism in industry and retail trade during Christmas shopping time, but business leaders signalled a lower need for labour, a monthly report from the European Commission shows.

The Economic Sentiment Indicator (ESI) for Croatia was 86.6 points in December, increasing by 0.8 points from the previous month, the Commission’s survey shows. The survey was carried out between 1 and 22 December, before a devastating earthquake struck Sisak-Moslavina County, leaving seven people killed and extensive property damage.

Industry confidence increased the most, by 4.9 points, followed by construction confidence (+4.2 points). Retail trade confidence also rose by 4.2 points, breaking a three-month downward streak.

The second wave of the coronavirus pandemic and the reimposition of restrictions to curb its spread had an adverse effect on consumer and services confidence, resulting in their respective declines of 2.8 and 2.1 points.

The Employment Expectations Indicator fell by six points to 90.9 points, its lowest level since June 2020, the report showed.

Increased optimism in both EU and euro area

The Economic Sentiment Indicator picked up in December in both the EU (+2.8 points up to 89.5 points) and the euro area (+2.7 points up to 90.4), almost offsetting the drop registered in November.

Consumer confidence increased the most in both areas, by 3.4 points in the EU and by 3.7 points in the euro area. Industry confidence also rose in both areas, by 1.2 points in the EU and by 1.4 points in the euro area.

Expectations decreased slightly in the retail trade and services sectors, which rely on close contacts with clients. Retail trade confidence and services confidence fell by 0.1 point in the EU, while in the euro area retail trade confidence contracted by 0.4 points and services confidence by 0.3 points.

The Employment Expectations Indicator rose in in both areas in December, by 2.1 points in the EU and by 1.4 points in the euro area, the Commission said.