By Ivan Anderzhanov in Moscow
The business climate in Central & Eastern Europe (CEE) picked up for the first time since the beginning of 2008, according to the latest Thomson Reuters & OeKB CEE Business Climate Index. The report also indicated that Russia is the top-rated country as far as business expectations are concerned.
The index polling 400 international companies showed improved morale in every country of the region, although it remained negative on balance.
Overall, the results indicate there may be signs of a turnaround in CEE. Investors’ economic expectations are cautiously optimistic for all countries and practically all sectors surveyed. The same applies to business expectations. For the first time since the surveys began in January 2007, investors’ business prospects in CEE were rated higher than the current business situation.
Poland has the best business climate, according to survey respondents, followed by the Czech Republic. On the other hand, Hungary and Ukraine have the worst. Respondents consider the current business situation of their businesses in these two countries to be particularly gloomy: a negative performance has been reported for 46% of their operations in Hungary and 60% in Ukraine. Respondents have significantly improved their business expectations for Russia, which was badly hit by the banking crisis.
The negative value for this indicator developed positively from April to July, with improved business results expected for 27% of business operations in this country over the next six months.
As a result, Russia is the top-rated country as far as business expectations are concerned. Russia is also the only CEE country where the level of investment could increase slightly over the upcoming twelve months: marginally more locations will be expanded (18%) than downsized (17%).
A sector analysis shows that banking is the only sector planning more expansion investment than disinvestment over the next twelve months: 14% of existing bank operations in CEE are to be increased, while 12% will be reduced or closed.