Expectations for Croatia's economy deteriorated in August to their lowest level since spring 2021, following the worsened economic sentiment in the EU and the euro zone, state agency Hina said on Tuesday, citing a publicly released report compiled by the European Commission.

The Economic Sentiment Indicator (ESI) in Croatia reached 102.9 points in August, or 3.2 points down from July,  a record-low since March 2021. The highest levels of pessimism was reportedly found among managers in the service sector and in retail – these sectors recorded drops by 10.6 and 6.4 points respectively.

Industry confidence also deteriorated slightly, falling by 0.9 points. Consumer expectations remained almost unchanged, while they improved in the construction sector, with an increase of 2 base points. The Employment Expectations Indicator remained almost unchanged at 108.2 points.

At the same time, managers estimated that the prevailing uncertainty in doing business had eased significantly in August, hence the Economic Uncertainty Indicator (EUI) decreased by 8.5 points, to 4.3 points.

The ESI decreased further in August in both the EU and the euro zone, falling to its lowest level since the spring of 2021, although the decrease was not as dramatic compared to Croatia. In the European Union, the index fell by one point, to 96.5 points, whereas in the euro zone it decreased by 1.3 points, to 97.6 points.

Industry confidence deteriorated in both categories, with a 1.4-point declinein the EU and by 2.2 points in the euro zone. Confidence in the services sector dropped by 0.9 points. Consumer confidence, on the other hand, was optimistic, with an increase of 1.0 points in the EU and 2.1 points in the euro zone. In construction, confidence remained virtually unchanged, inching up 0.4 points.

Business leaders said they expected to hire more workers in the coming months, which was reflected in the growth of the EEI index in August, by 0.4 points in the EU, and by 0.8 points in the euro zone. Business uncertainty eased in August, with the EUI index falling by 0.6 points in the EU and by 0.7 points in the euro zone.