The foreseeable future looks a bit more promising

Some 400 Austria- based head quarters managing about 1.400 participations in the CEE region from here are interviewed for compiling the business climate index Central and Eastern Europe of the OEKB (Österreichische Kontrollbank). In April already the ninth survey of CEE-trends was carried out. According to this the business climate indicator has dropped by 5 percentage points to a balance value of minus 15 between January and April 2009. For comparison the OeKB points out that the indicator dropped by 39 percentage points between October 2008 and January 2009.

Business expectations are slightly less pessimistic. Compared with January 2009, the corresponding balance value (positive statements minus negative ones) improved by 9 percentage points in April 2009. But this sliver lining of the clouds cannot be considered a reversal of the economic trend in Central and Eastern Europe yet.

According to the difficult economic situation the current business situation of the CEE-enterprises is considered less than favourable by the participants in the survey. In fact sluggish business is reported for almost one third of the CEE-branches. Accordingly, the balance value for the current business situation dropped from plus 15 percentage points in January to minus 6 percentage points in April. But this drop by 21 percentage points is significantly smaller than the changes between October 2008 and January 2009, when the same balance value recorded a drop by 33 percentage points.

Taking a closer look at individual countries reveals a different situation: Although the whole region of Central and Eastern Europe suffers from an economic crisis, the interviewed companies see the business climate in Poland, the Czech Republic, Slovakia and Slovenia quite satisfactory. The situation in Russia, Bulgaria, Ukraine and Hungary is completely different. On the one hand the current business situation has significantly worsened in comparison to January 2009, on the other hand business prospects are clearly bleak for the next six months - especially for Bulgaria and Hungary. But in all four countries – especially in Ukraine and Russia- the entrepreneurs´ expectations are, in general, less pessimistic than at the beginning of the year.

While branches highly depending on the cyclical trend, such as the construction industry, the industry, the real estate business and the traffic sector, exhibit a rather bleak business climate, a relatively positive attitude prevails in branches like the business services (business consultants, architecture firms, IT-services etc.), the insurance industry, the power producing industry and the water supply industry.

Especially insurance companies are absolutely content with their current business situation. 61 per cent report flourishing business and thus consider their course of business significantly better than in January 2009 (positive statements: 37 per cent). For none of the locations any alienation of capital has been taken into consideration. The power producing and the water supply industries continue their expansion: 23 per cent of the enterprises of this sector want to open up new markets in the next 12 months. The real estate branch is different. They continue withdrawing from the region. 31 per cent of the real estate companies will withdraw direct investment capital from the region.