Deloitte’s new Private Equity Confidence Survey Central Europe says that sentiment around the economy is continuing to rise on the continent.
According to the firm, 59% believe conditions will remain the same, with 31% expecting conditions to get better. The firm also said that pessimism has fallen to 10% from 43% a year ago.
Deloitte said: “Expectations around market activity are stabilising, with over half of respondents (51%) expecting activity levels to remain the same, up from 37% last time. Over two-fifths expect an increase, while the proportion expecting a reduction in activity has more than halved to just 6%.”
See also: “Investors are too optimistic about the second half of the year, warn Natixis strategists“
It added: “Investors in central Europe are vastly more optimistic about liquidity in the region, with a third expecting debt availability to increase (33%) or remain the same (59%) for the rest of this year. The numbers reinforce the positivity seen over the last year, with our latest Survey the fourth in a row to see a reduction in pessimism.”
Deloitte said that the economies of central Europe continue to outperform their western counterparts, with GDP rising to 2.2% this year, with 3.1% predicted for next year. Poland remains an outlier, with GDP growth for 2024 predicted of 2.8%. Meanwhile, the Western Balkan regions saw investment rise by 2.5% in 2023, with another 3.3% expected this year.
The report also notes optimism about liquidity in the region, with 92% expecting debt availability to remain stable or increase, up from 78% of respondents at the end of last year and 49% of respondents in June 2023.
As to where these investors will be placing their money, Deloitte writes: “Further signs of optimism can be seen in the number of respondents expecting to focus on new deals for the remainder of 2024. With 59% expecting to spend most of their time on deployment, it is clear that deal-doers feel the current backdrop is conducive to transacting.
This is up a fifth on last semester, while the number expecting to nurture portfolios saw a commensurate drop from over a third in the winter (35%) to just a quarter now (25%).”
It was also noted that larger transactions may be making some form of comeback, with over two-fifths of deal-doers
(41%) expecting average deal sizes to increase. This was double December’s survey, and four times that of the one taken in June 2023.
