By Sylvia Westall
VIENNA, Sept 8 (Reuters) - Business sentiment in central and
eastern Europe slipped this summer but investors remained
generally optimistic for good growth this year, a survey showed
on Monday.
The Thomson Reuters & OeKB CEE Business Climate index
<REUTERSOEKB>, based on a July poll of 400 international firms
that manage 1,400 companies in the region, was carried out
before Russia's war with Georgia last month.
The index declined to 44 from 49 in the previous survey in
April. Any figure above zero shows corporate morale is positive,
so despite the fall, the survey indicated companies were still
upbeat about the growth outlook.
Russia, which crushed Georgian forces in a brief war in
August, was one of the top performers. It scored 66 for business
climate, from 64 in the previous April survey, and was second
after Ukraine as an investment destination, the survey showed.
More than half of those dealing in Russia said they planned
further expansion in the next 12 months and no direct investors
were planning to withdraw.
"However, it remains to be seen just how much recent events
(like the South Ossetia crisis) may impact the business
climate," said Austrian export financing bank Oesterreichische
Kontrollbank (OeKB), which prepared the survey.
TEMPERED OPTIMISM
Overall the survey indicated growth in the region -- which
has outpaced that of the original 15 member states of the
European Union -- would continue this year.
Around a third of firms were expected to pump fresh money
into the region over the next twelve months, with Russia,
Bulgaria, Croatia and Ukraine reaping the gains.
Nevertheless, all component parts of the survey fell except
for investment stocks, which remained steady. The economic
outlook fell to 31, from 34, while business expectations fell
the most to 35, from 42.
For Hungary, forecasts for economic growth tumbled into
negative territory for the first time since the survey started.
As in the previous four surveys, it was the most downbeat, with
the business climate dropping to 22 from 30.
A majority of investors there saw the economy as stable but
around a quarter expected the situation to worsen and only a
fifth saw a better picture ahead.
The Czechs saw their business climate outlook slip to 41,
from 51 in the previous report in April. But the outlook was
sunnier for the region's biggest economy, Poland, which rose to
57, from 56. Slovenia, Montenegro and Serbia also rose slightly.
In the latter, where a pro-Western government and the
delivery of war crimes suspect Radovan Karadzic to the Hague
have helped boost Serbia's European Union entry aspirations, all
estimates were higher than in the previous survey.
"The latest political events in Serbia appeared to have
helped with stability and confidence-building. The formation of
a government comprising pro-Western parties is an important sign
that (Serbia) is approaching the European Union," the bank said.
A breakdown of the survey showed the mood had deteriorated
across the region, most markedly in the insurance sector, while
banks were upbeat.
The outlook is good for businesses dealing in energy and
water supplies. Half of those already working in the region
plan further investment while about 70 percent of all businesses
in the sector hope to invest in new locations.
The survey was first published in January 2007, and was
issued three times last year -- January, July and September. It
is now quarterly.
FOR A TABLE OF DATA, DOUBLE CLICK ON []
NOTE - Distributed exclusively on the Reuters System, the
Reuters & OeKB Central European Business Climate Index is based
on quarterly surveys of 400 international companies with
regional headquarters in Austria, which manage 1,400 affiliate
companies in 19 countries in central and eastern Europe.
