Expectations for the Croatian economy deteriorated in June 2024, characterised by a wave of pessimism in the service sector and subdued consumer confidence. This is according to the European Commission's monthly economic sentiment report, which was published on Thursday.

In June 2024, the Economic Sentiment Indicator (ESI) in Croatia fell by 2.4 points compared to May, to 105.3 points.

Confidence in the service sector deteriorated the most in June, with the corresponding indicator falling by 8 points. Managers assessed demand to be significantly worse than in the last three months and were also cautious in their forecasts for the summer. In their opinion, uncertainty is much more pronounced than in May.

Industry managers slightly more optimistic

Consumer confidence has also deteriorated. The ESI fell by just over four points, reflecting a worsening assessment of the financial situation over the past 12 months. Consumers have also become more cautious about the financial situation of their households over the next 12 months and have become more cautious about making major purchases.

Optimism has also declined in the retail sector, which is reflected in a fall of 1.5 points in the corresponding indicator.

Industrial managers were somewhat more optimistic, with the corresponding indicator rising by 1.7 points. They rate the production trend of the past few months as significantly better and are cautious with forecasts for foreign demand.

Sentiment also improved in the construction sector, with the corresponding indicator rising by almost two points.

Overall, managers in the economy are expecting weaker employment development in the summer season, as shown by the Employment Expectations Indicator (EEI), which fell by 1.6 points compared to May. Nevertheless, they are signalling less uncertainty in business forecasts, which is reflected in a three-point drop in the economic uncertainty indicator (EUI).

No change in the eurozone

Sentiment in the eurozone with its 20 members has not changed much since May. The ESI only fell by 0.2 points compared to May to 95.9 points.

Managers’ expectations fell the most in the retail and construction sectors, with the corresponding indicator dropping by one and 0.8 points respectively.

Confidence in industry, the service sector and among consumers remained virtually unchanged.

Managers in the eurozone expect a slightly slower pace of employment growth in the coming months, as shown by a 1.6-point drop in the EEI. Uncertainty among companies has decreased slightly, with the EUI falling by 0.5 points.

Of the leading economies in the eurozone, Spain recorded the greatest improvement in the ESI at 1.1 points.

In France and Italy, the ESI deteriorated at the beginning of the summer, falling by 0.7 points, while in Germany it remained almost unchanged compared to May.

There were also no major changes in expectations in Poland, the largest EU economy outside the eurozone.