Expectations for Croatia's economy have improved significantly in March, reaching the highest level over the past year, prompted by optimism in the services sector and retail, with business leaders signalling a greater need for workers, shows a report by the European Commission.

The Economic Sentiment Indicator (ESI) in Croatia grew in March by 5.6 points from February to 99.7 points, the highest level since March 2020 and a step away from its long-term average of 100 points.

Expectations improved the most among business leaders in the services sector, with the indicator growing by 16.8 points, also to the highest level since March 2020.

Business leaders in the retail sector, too, are optimistic, with the sector indicator going up by 12.2 points.

Expectations among consumers and in the construction sector have increased markedly as well, with the indicators having gone up by 4.9 and 4.1 points respectively from February.

Expectations for the industry sector have deteriorated slightly, by 0.4 points.

Business leaders signal a considerably greater need for workers in the coming period, expressed in a 7.3 point increase in the Employment Expectations Indicator (EEI) to 97.6 points, its highest level since October 2020.

Improvement in both the EU and the euro area

The Economic Sentiment Indicators in the EU and the euro area, too, saw an increase in March, going up by 6.9 and 7.6 points respectively. The ESI in the EU grew to 100 points, its long-term average, and in the euro area it rose to 101 points.

The indicator for expectations in the services sector grew the most in both areas, by seven points in the EU and by 7.7 points in the euro area.

Business leaders’ expectations in the retail sector improved as well, by 6.1 points in the EU and by 6.9 points in the euro area.

The sentiment of business leaders in the industrial and construction sectors and among consumers has improved as well. The indicator for the industrial sector went up by 4.6 points and in the euro area it grew by 5.1 points. In the construction sector the indicator rose by 4.4 and 4.8 points respectively.

The indicator for consumer expectations grew by 3.6 points in the EU and by four points in the euro area.

Corporate leaders expect to employ more workers in the coming period, with the EEI going up by 6.1 points in the EU and by 6.8 points in the euro area.