Business Sentiment Index

Central Europe / 6th edition / October 2011

Have we been here before? Sentiment returns to levels of one year ago

After five surveys charting anoverall improvement in sentiment, we are back to thesame level asOctober 2010.

Introduction

Iam pleased to introduce thesixth edition of theBusiness Sentiment Index. Its now been two years since we began publishing theIndex in September 2009. Up until now, each edition has found that overall, senior executives in Central Europe have been growing more optimistic about economic prospects in theregion. However, this sixth Index bucks this positive trend. Executives reported amore negative outlook on thegeneral economic situation than in thelast survey in June 2011, and sentiment has fallen nine points (to 110), returning to thesame level asOctober 2010. Such asharp fall in just six months is particularly significant, asthelast Index in June found that continued expectations for increased output had been taking hold in theregion, especially in those countries which relied on exports to markets in Western Europe. Since then, however, theEuropean sovereign debt crisis and thedowngrading of US debt has dented theconfidence of our regions executives. Thecontinuing fragility of therecovery of theglobal economy is also influencing this negative change in sentiment. Thefindings of this sixth edition underline thestark differences in opinion within theindividual economies surveyed. Since theglobal recession hit, theregion has been split in two in terms of outlook. For thepast 12-18 months, thecountries in northern Central Europe (Czech Republic, Slovakia and Poland) had experienced genuine growth, amore positive outlook and improved expectations. Executives were therefore bullish about their economic and business prospects. Their confidence has plummeted asaresult of thedevelopments of thepast six months in Western Europe and theEurozone and theconsequent expected decline in demand.

In southern Central Europe (Hungary, Romania and Croatia), however, growth prospects and macroeconomic indicators continued to be poor. Executives expectations were not especially high to begin with, and have historically been themost cautious in each Index. In fact, many are yet to express apositive view at all. Therecent turmoil in theglobal economic markets has therefore made less of animpression on them ason their counterparts in thenorth of theregion. In this edition we also asked executives to comment on how important they felt public aid was in determining thelocation of anew investment for their company. For instance, incentives like Special Economic Zones have been aproven stimulant of investment in Central Europe and other parts of theworld. Executives responses indicate that there is still much governments in our region could be doing to make full use of these economic stimuli. Ultimately itwill take abilaterally credible solution to theEuropean sovereign debt crisis acceptable to both governments and business in order to start pushing thesentiment of our regions executives back up. Thenext Index in May 2012 should give us agood indication asto whether thetwo halves of theregion will start to come together with ashared outlook for theeconomic future, or if they will continue to drift further apart.

Bla Seres Managing Partner Financial Advisory Deloitte Central Europe

Deloitte Business Sentiment Index 3

Highlights
Thesixth edition of theIndex sees afall in overall sentiment for thefirst time since thesurvey was first published in September 2009. Themain composite index is now at 110 down nine points since thelast edition in June 2011. This decline represents areversal of thetrend of five consecutive increases in sentiment in theregion. Executives in Central Europe have lost confidence in any sustained recovery in theregion due to theEuropean sovereign debt crisis and inertia in theEU. This lack of confidence is borne out by theresults of this survey. Executives in every country save for Romania expressed very negative sentiment about their countrys economic prospects over thenext six months. Since thebeginning of theglobal recession, Central Europe has actually been split into two in terms of outlook. In thenorth (Czech Republic, Poland and Slovakia), economies rely heavily on manufacturing and particularly on exporting goods to Western Europe. These countries have therefore been themost affected by therepercussions of theEuropean sovereign debt crisis. Thefindings for thesouth of theregion (Hungary, Romania and Croatia) reveal that theEuropean debt crisis has made much less of animpact. Sentiment sinks in thenorth Poland, for instance, which historically has had themost optimistic executives of thecountries surveyed, reports asignificant fall in sentiment with its composite index now down by 16 points to 118, thesame level aswhen we began theIndex two years ago. Sentiment in theCzech Republic fell by asimilar proportion (14 points) to 106 in its composite index. Czech executives reported negatively developing sentiment about every question in thesurvey. In both Poland and theCzech Republic, sentiment trended negatively about expected revenues from sales and any increase in employment levels over thenext 12 months. Czech executives were especially negative about thelikelihood of launching new products and services. In Slovakia, sentiment also fell (albeit less dramatically than in theCzech Republic and Poland) by nine points, to 114 in its composite index. Sentiment of Slovak executives was thehardest hit of all thecountries surveyed on thetopic of thegeneral prospects for their countrys economy over thenext six months, dropping to thelowest levels of thepast 2 years. Despite their negative outlook about thecountrys economy, Slovakias executives were generally positive about thepresent availability of credit, and expressed asimilarly positive outlook about acquisition plans and regulatory changes in their country over thenext 12 months.

Figure 1: Main composite index by country (Values - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 140
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South continues to struggle In Croatia, sentiment decreased by just four points to 108 in its composite index. This actually represents animprovement over thefirst four editions of theIndex and only aslight decline from thehigh of 112 reported in theprevious edition in June 2011. Croatian executives were more cautious about thepresent availability of credit for their firms and theaverage time taken for their companies to receive payments from debtors. However, their sentiment developed more positively than other countries executives about thefinancial prospects for their companies, thelikelihood of launching new products and services, and total employment levels at their firms over thenext 12 months. In Hungary, sentiment has continued to deteriorate and overall is now down by six points to 102 in its composite index. Executives outlook in Hungary began to deteriorate in thethird edition of thesurvey in 1Q 10 and has fallen progressively in subsequent surveys. In this edition, sentiment among Hungarian executives changed most negatively about thecountrys economic prospects. They also reported thegreatest decline in sentiment in theregion regarding revenues from sales over thenext 12 months. Asin theother southern countries in theregion, Hungarian executives were more positive about employment levels in their companies over thenext 12 months. Hungary also joined Slovakia in expressing astable outlook on capital expenditure over thenext 12 months, theonly two countries in thesample who shared this view.

In Romania, sentiment dropped by just three points to 112 in its composite index. This was thesmallest change in overall outlook among thecountries in thesurvey. Romanian executives reported arelatively unchanged outlook on their countrys general economic prospects over thenext six months, again, themost measured response to this question across thesix countries. Although Romanian executives were more negative overall about thefinancial prospects of their companies, thepresent availability of credit and theaverage time taken for payment of dues, they reported themost positive change in outlook regarding revenues from sales and acquisition plans over thenext 12 months. This indicates that executives are bullish about Romanias economy over thenext six to 12 months, areversal of theoutlook expressed by every other countrys executives in thesurvey.

Figure 2: Main composite index by industry (Values - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 140
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Deloitte Business Sentiment Index

Croatia
Slaven uri Manager, Financial Advisory

Theresults of thesixth survey show that Croatian executives continue to be quite cautious about prospects for their country and their companies despite therecent news on thefinalization of Croatias EU membership. Theresults are similar to those of theother countries in theSouth, Hungary and Romania. Aswe have seen elsewhere in theIndex, thepolarised opinion between those in theNorth (historically, positive and bullish) and those in theSouth (more downbeat and pessimistic) has divided Central Europes executives. Although theconsistent rise in sentiment over thepast five surveys has been broken with this sixth Index, opinion has only fallen slightly in Croatia. Executives also have amore balanced outlook about their companies prospects than theother countries surveyed. They donot appear to see any significant trouble ahead for thetime being despite theproblems looming over theEurozone and Western Europe. That said, neither doCroatian executives see any significant prospects for growth. This somewhat flatter perspective could be aresult of thefact that thecountry has had aparticularly strong tourist season this summer, providing amuch-needed boost to morale and to theeconomy. Theelections in December and subsequent formation of anew government should activate theprivitisation process, currently on hold due to theelections.

Itis also important to note that Croatia was thelast among thesurveyed countries to officially emerge from therecession. Thecountry posted positive year-on-year GDP growth in Q2 2011, thefirst quarter of positive growth since 2008, and this is having apositive effect on theoutlool from executives. In June 2011, Croatia officially completed EU accession negotiations. Itis likely that executives have positive expectations asaresult of thecountry becoming apart of theEU, resulting in amore optimistic outlook towards issues such asemployment levels. Croatian executives are quite pessimistic about any improvements in thecurrent financial prospects for their companies (Figure 3). Most (58%) reported abalanced/ mixed opinion, but only 39% of executives were positive about prospects, down from 53% in theprevious survey. That said, itis heartening to see that just 3% expected negative prospects; asharp improvement on the20% who shared this view in June 2011. We see this mixed overall outlook for companies fortunes asbeing due to three factors. Firstly, Croatia has alower base than theother countries surveyed in terms of GDP growth and company results. Secondly, Croatia had avery good tourist season, which has positively affected theoverall mood of business leaders. Finally, thecountry experienced positive GDP growth for thefirst time since 2008 in Q2 2011.

Figure 3: Financial prospects for your company 100% 80% 60% 40%
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Themajority of Croatian executives (70%) are now of theopinion that payment terms are excessive, anincrease from the53% who expressed this view in theprevious two editions (Figure 4). Meanwhile, only 30% of executives feel terms are safe, compared to 47% in June 2011. Theissue of collecting outstanding receivables is affecting all of theformer Yugoslavia, including Slovenia, Bosnia-Herzegovina and Serbia. Theproblems related to thedifficulties and delays in collecting payments requires significant financial discipline not only from thelarge state-owned companies but also from big business. Household, corporate and government expenditures in Croatia are still all under severe pressure and although exports are now growing, consumer spending remains flat and consumer demand is weak. Itis therefore interesting and somewhat contrary to expectations to discover that executives feel increasingly positive about launching new products or services (Figure 5). Themajority of Croatian executives responding to thesurvey (67%) are optimistic about launching new products or services over thenext 12 months. This proportion of respondents has been fairly steady throughout theprevious five editions of thesurvey. One quarter (27%) is pessimistic about new launches; thelowest such share of respondents since thefirst survey in September 09.

Figure 4: Current terms of payment 40% 100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60%
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Deloitte Business Sentiment Index

Czech Republic
Diana Rdl Rogerov Partner, Audit

Thesixth wave of theIndex finds that thesentiment of Czech executives took apronounced turn toward thenegative over theprevious six months. There are anumber of reasons for this change in outlook. Firstly, there are thefinancial crises in Europe and theUS to contend with. Thesovereign debt issues of theEurozone have had asignificant impact on capital markets, and there is agreat deal of uncertainty about how theEU is going to solve these problems and whether they might spread to affect other states.
Figure 6: General prospects of theCzech Republics economy in thenext 6 months 100%
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Secondly, thedowngrading of theUS debt and theUS governments contentious efforts to reach consensus and resolve thecrisis have also negatively impacted executives outlooks. Thirdly, theCzech Republic is experiencing adecrease in corporate investment and declining consumer expenditure. And, asanexport economy, itis finding that ascountries in theEU are struggling, demand for exports is falling. Thenegative change in sentiment, therefore, reflects thefact that theCzech economy isnt proving to be flexible enough to concentrate on new markets. Executives confidence in their own markets is worryingly low. More than half (54%) of Czech executives expect thecountrys economy to stay thesame over thenext six months, thehighest share expressing that sentiment since thefirst Index was published in September 2009 (Figure 6). Asimilar proportion (50%) express positive sentiment about their companys financial prospects, down eight percentage points from June 2011. Theknock-on effect of theexecutives uncertainty about thecountrys economic prospects over thenext six months means that there is little, if any, positive sentiment about anincrease in employment levels, salaries, and therefore in consumer spending. If businesses arent expecting anincrease in revenues, they will not be making investments and have no appetite to develop new products or expand to new markets. We cannot expect Czech executives to be optimistic about their companys revenues growth if thewhole economy is struggling (Figure 7). However, we believe this outlook will change. Executives views correspond to human nature: even if theeconomy is not performing well many continue to believe that theprospects for their company are unrelated to thewider environment. If thefiscal situation in theEurozone worsens, or does not change, we will see more executives expressing pessimism about their companies prospects due to thestrong connection of theCzech economy to Western European markets.

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Despite sentiment developing negatively overall, nearly half (46%) of Czech executives reported that they expect revenue from sales to increase somewhat over thenext 12 months, while 27% expect revenues to deteriorate over thesame period (Figure 8). This is aslight decrease from theprevious edition, when ahigh of 52% expected increased revenues, while only 16% believed revenues would decrease. This response is indicative of thedelay between theeconomic situation and its impact on sales revenues, asmany executives, especially in Manufacturing, plan their budgets and forecasts one year in advance and contracts are drawn up to cover longer periods of time. Itwill be very interesting to gauge sentiment on this question in thenext edition in six months. There is asmall (two percentage points) increase in theproportion of Czech executives who believe theregulatory environment will stay broadly unchanged (now 73%, compared to 71% in June 2011) (Figure 9). There is awide perception that any regulatory changes can only happen after theEU decides how to handle thecurrent debt crisis. Until there is consensus behind its recovery plan, executives feel that theregulatory environment in theCzech Republic wont change dramatically. Even after thebail-out of theGreek economy, no big regulatory changes have taken place in theCzech Republic or in our region. There is apossibility we may see regulatory changes if Western European countries revise banking regulations. Itis clear that thebiggest issue influencing executives sentiment in theCzech Republic is their lack of confidence in theEurozones ability to deal with theongoing sovereign debt crisis. Asconfidence is very difficult to change rapidly, we can expect asimilar pessimistic outlook in thenext survey. Sentiment will only improve if, and when, theEurozone confronts its longstanding issues with sovereign debt.

Figure 8: Prospects for sales revenues over thenext 12 months 100%

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Deloitte Business Sentiment Index

Hungary
Pter Szp Partner, Business Advisory Services

Theresults of this edition of theIndex show that executives in Hungary are pessimistic about thecurrent business climate. Thecomposite index in Hungary is now down six points from June 2011 to 102, just two points above thelevel of thefirst Index in September 2009.

Figure 10: Financial prospects for your company 100% 80% 60% 40% 100% 20% 80% 0% 60%
28 16 7 27 14 25 35 57 53 33 49 43 47 40 37

Itseems that Hungary is on thecusp of asecond wave of theeconomic crisis. Theresults of thefirst two quarters of 2011 were disappointing, even before signs of apotential double dip began to emerge over thesummer. Consumer expenditure, industrial output and foreign direct investment have all slowed down considerably in thepast six months. This comes on top of theweak GDP growth over thepast four years. Asaresult, executives have had to postpone any hopes of solid business results and asustainable economic recovery. Despite themore negative outlook for thecountry, half of theHungarian executives in this survey (49%) expressed abalanced view about thefinancial prospects for their company, up from 33% in June 2011 (Figure 10). Slightly fewer executives expect apositive outlook for their companies (37% compared to 40% in June 2011) and fewer expect anegative outlook (14% versus 27% in June). For thefirst time, amajority (57%) of Hungarian executives feel that their revenues from sales will remain unchanged over thenext twelve months (Figure 11). Only 29% remain optimistic that revenues will increase, while 14% of those surveyed expect revenues to reduce. Exports and imports have started to slow down in Hungary, with imports falling faster than exports. However, amajor risk is that Western European exports will shrink due to thesovereign debt crisis in theEurozone and consequently Hungarian export growth to these markets will inevitably contract. Although Hungarian executives expect new opportunities to develop in Asia, with more companies turning to Chinese suppliers and technology, its clear that afall in export levels will pose avery severe threat to any economic recovery in 2012. Executives will be watching theexport situation closely astheinternal market is not large enough to support growth by itself.

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TheIndex shows that over half (54%) of Hungarian executives feel payment terms are safe, although theshare of those who feel its unsafe is increasing (40% in thecurrent survey versus 30% in June 2011) (Figure 12). This increase could be because companies are finding itmore difficult to collect payments from thepublic sector. Just under half (49%) of Hungarian executives are optimistic about launching new products and services (Figure 13). One third (34%) are pessimistic about new launches. This is indicative of theexport-oriented nature of large corporates. Hungary does not have alarge enough internal market to support growth, especially with thelack of consumer confidence in thecountry, which is falling at thefastest rate in theregion. Two thirds of Hungarian executives (60%) expect workforce size at their firms to stay unchanged over thenext 12 months, anincrease from the47% who felt this way in June 2011 (Figure 14). However, fewer executives expect their workforce to reduce in size compared to theprevious survey, with 17% expressing this view compared to 30% in theprevious survey. Thechanges in opinion about employment levels reflect thecontroversy surrounding thenew labour code currently being drafted by thegovernment. Thecode aims to introduce more flexibility to thelabour market and ultimately create more jobs. To achieve this, itwill limit thepowers of trade unions and make iteasier for employers to dismiss workers. With these new rules set to take effect on 1 January 2012, thenext edition of theIndex should show us whether executives really see itasaspur to employment in thelong term.

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Slovakia
Peter Horovk Senior Manager, Consulting

Thanks to its low indebtedness, relatively cheap workforce, advantageous geographical position within Europe and high foreign direct investment (FDI) inflows in recent years, theSlovak economy has witnessed arather speedy recovery from the2008 financial crisis.

However, worrying artefacts like ahigh unemployment rate (currently the6th highest in theEU) and cautious spending are slowing down faster expansion. Moreover, reliance on foreign trade, linkage of capital to Western Europe economies and transition to thecommon European currency have made theSlovak economy vulnerable to theeffects of apossible double-dip. Thevolatility and unpredictable developments on theworlds financial markets have sent discomforting signals to businesses across theglobe while governments have been trying to save public finances overwhelmed by debt incurred in theprinting of new bills. Thesusceptibility of theSlovak economy to theforces of thecrisess contagion have been evident in theresults of our most recent survey. Themain composite index of Slovak sentiment decreased from 123 points in June 2011 to 114 in thelatest survey. Slovak executives expectations about thefuture prospects of their economy have grown negative since thelast survey in June 2011 (Figure 15). While just months ago not asingle executive foresaw that economic prospects would have deteriorated in six months, 52% of respondents have now changed their minds and predicted amoderate economic slowdown. This sharp fall in positive sentiment seems to be caused by awidespread decrease in thetrust of investors when liquidity problems have reduced companies capital expenditures and ahigh level of indebtedness threatens public finance. Even though theSlovak economy has potential for growth, itis hindered by therecent decline in global economic performance.

Figure 15: General prospects of Slovakias economy in thenext 6 months 100%

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Amoderate drop in executives expectations about thefinancial prospects for their companies was observed in thelatest survey (Figure 16). Executives still remain largely optimistic but have become less assured, shifting their responses from definitely positive to just fairly positive. Thenegative perspective regarding theperformance of their companies might be lagging behind thecountrys future economic outlook thesame way that impacts on thereal economy actually follow months after themarkets have suffered. Most Slovak executives still assert that credit is available to their companies (Figure 17). Despite this fact, banks have learned their lesson during thecrisis and now tend to be more conservative. Many have tightened lending conditions for loan applicants with ahigher risk of default. When economic conditions begin to deteriorate, banks reluctance to lend might lead to many companies being closed down because of atemporary shortage of funds caused by decreased demand or debtors defaults. Even though there is aconstant demand for new qualified workers in theautomotive industry, for example, fewer executives (24% in thelast edition) expect their companys workforce to somewhat increase than reported in theprevious survey (42% in June 2011) (Figure 18). Nearly half of Slovak executives (48%) expect their companys workforce to stay unchanged compared to the35% who expressed this view in thelast edition. We see this development asbeing caused by adeceleration in consumption and more restricted purchasing behaviour stemming from theongoing sovereign debt crisis in theEurozone.

Figure 17: Present availability of credit 40% 100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60%
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Positive (Easily available and Somewhat available) 40% Negative (Somewhat hard to get and Very hard to get) 100% Dont know 20% Q: How do you rate thepresent availability of credit for your company? Is it 80% 0% 60% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11

Figure 18: Changes in employment levels over thenext 12 months 40% 100% 20% 80% 0% 60% 40% 20% 0%
53 a 56 4Q 09 10 8 20 32 45

30

1Q 10
43

3Q 10
29

2Q 11

4Q 11
49

36

37

36

37

35 19 4 21

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Positive (Increase significantly and Increase somewhat) Stay unchanged Negative (Reduce somewhat and Reduce significantly) Dont know Q: How do you expect your firms total workforce to change in size over thenext 12 months time? Will it

Deloitte Business Sentiment Index

13

Poland
Rafa Antczak Vice-President, Deloitte Business Consulting

In 2Q11, economic growth in Poland reached 4.5% year-on-year compared to 2.8% in Germany. Poland was one of thefastest-growing economies in theEU and among thegroup of CEE countries.

Figure 19: Prospects for sales revenues over thenext 12 months 100% 80%
59

But these heydays may be over with thedeterioration of global economic conditions and wide-spread expectations of thesecond wave of aglobal crisis, this time not in theprivate but thepublic sector. Executives expectations in Poland registered themost negative change in sentiment compared to other countries, though itwas adrop from thehighest level among thesix countries in thesample. One reason for this slowing growth dynamic in Polands GDP in thesecond half of 2011 might be astatistical effect when comparing against therapid acceleration of GDP growth in thesame period in 2010. Another reason could be theweakening of investment demand. If so, consumption demand would remain theonly engine of growth for thePolish economy asitwas already in 2008-2009. There is yet another indicator of uncertainty among companies. In 2Q11, there was acontinued strong rise in reserves in theeconomy. Apositive interpretation of this phenomenon, indicating thesustainability of economic growth at thecurrent level, was thefurther rebuilding of inventories, aprocess noted since thebeginning of 2010 after experiencing asignificant decline in 2009. Anegative interpretation, however, is anincrease of production stockpiled in reserves led by thedeterioration of economic activity in theEU. Thelatter interpretation is confirmed by slower new orders in theindustrial sector. Thesales index excluding fuel and vehicles sales almost doubled from 4.9% year-on-year in 1Q11 to 9.0% in 2Q11 and further accelerated to arecord level of 11.3% in August (market consensus was 9.1% yoy broadly in line with thesecond quarter figures). Its no surprise that executives in Poland remain themost upbeat in theregion about revenue from sales over thenext 12 months though fewer executives now expect anincrease than in theprevious edition (Figure 19). Retail trade should remain themost stable element of thegrowth in market services value added because itis themost closely related to strong household consumption. There is also anexpectation that 2Q12 should bring some one-off upswing in retail trade dynamics due to EURO 2012.

60% 40% 100% 20% 80% 0% 60%

74 89

70

62 85

33 16 9 7 9 3 23 3 6 9

28 10

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Positive (Increase significantly and Increase somewhat) 40% Stay unchanged 100% Negative (Reduce somewhat and Reduce significantly) 20% Q: In 12 months time, do you expect your revenue from sales to 80% 0% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 60% Figure 20: Changes in employment levels over thenext 12 months 40% 100% 20% 80% 0% 60% 40% 100% 20%
26 41 40 27 21 21 14 22 34 40 36 10

4Q 11

3Q 09
60

4Q 09
37

1Q 10
26

3Q 10
33

2Q 11

4Q 11
69

43

80% 0% 60%

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Positive (Increase significantly and Increase somewhat) 40% Stay unchanged 100% Negative (Reduce somewhat and Reduce significantly) 20% Q: How do you expect your firms total workforce to change in size over thenext 12 months 80% time? Will it 0% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11 60% 40% 100% 20% 14 80% 0%

100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

With higher unemployment or reluctance to hire new workers, employers in Poland will successfully maintain discipline in wages and only adecrease in inflation will impact aslight acceleration of growth in real terms (Figure 20). Theaverage unemployment rate will remain high and will not decline below 11% at theend of 2011. Especially worrisome are theunemployment figures of young workers (24 and younger) which are more than double theaverage figure in Poland (currently at 25%). However itis apan-European phenomenon, with young unemployment exceeding 30% in Spain and 40% in Greece. In 2Q11, Consumer Price Index (CPI) inflation in Poland continued to rise. Theaverage growth in prices of 4.6% year-on-year was higher than the3.8% noted in 1Q11, and in May prices rose to over 5% (alevel not seen since August 2001). Rising inflation has asupply-side character. Themain price impulses come from food products (7.5% year-on-year in 2Q11), energy (5.9%) and transportation (6.9%). Since theend of 2010 theNational Bank of Poland reference rate has risen by 1 percentage point, including hikes in May and June 2011 each by 25 basis points, to 4.5%. Therate hikes contrast to therise in CPI inflation of 0.9 percentage points. Theaccommodative character of such decisions aimed at maintaining real interest rates at aminimally plus level becomes obvious in theenvironment of fragile growth. Theinterest rate increases apparently did not affect executives expectations regarding credit availability in Poland, with two possible explanations. Thefirst is that large companies are registering record-high levels of deposits that can be utilized for fixed investments or M&A at any time. Secondly, big companies have easy access to international financial markets where interest rates remain at record-low levels and are expected to stay that way till 2012/2013 (Figure 21). However, Polish executives expectations for M&A activity over thenext 12 months are asflat asaboard (Figure 22). Taken together with low expectations on fixed investments in anenvironment of record-low interest rates, these factors point to wide-spread fears of thenext wave of thecrisis, or aso-called double dip. Thequestion is how deep this dip might be.

Figure 21: Present availability of credit 40% 100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60%
23 5 15 9 2 10 13 9 6 7 7

3Q 09
72

4Q 09
85

1Q 10
89

3Q 10
77

2Q 11
85

4Q 11
86

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Positive (Easily available and Somewhat available) 40% Negative (Somewhat hard to get and Very hard to get) 100% Dont know 20% Q: How do you rate thepresent availability of credit for your company? Is it 80% 0% 60% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11

Figure 22: Outlook on acquisitions over thenext 12 months 40% 100% 20% 80% 0% 60% 40% 20% 0%
56 42 57 50 52 55 30 22 29 23 36 31

3Q 09
28

22 4Q 09

14 1Q 10

23 3Q 10

2Q 11
9

10 4Q 11

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Positive (Extremely likely and Somewhat likely) Neither likely nor unlikely Negative (Somewhat unlikely and Extremely unlikely) Dont know Q: Would you say that adecision by your company to acquire another company over thenext 12 months is

Deloitte Business Sentiment Index

15

Romania
George Mucibabici Chairman, Deloitte Romania

Feelings about theRomanian economy are mixed asdebate intensifies about thepotential risk of adouble-dip recession in developed countries across theworld. Investors are turning their backs on theWest and starting to look for new opportunities in less exposed developing countries.

In thecontext of fears about theglobal economy, Moodys has recently warned about anincreased possibility that Romania would default in thenext 5 years. On theother hand, news about new investment plans in thecountry are piling up. With anIMF stand-by agreement disciplining governmental policies and two consecutive quarterly hikes in GDP this year, Romania seems, at least on paper, to be recession-free and less risky. According to this edition of theIndex, 55% of Romanian executives expect theeconomys prospects to stay thesame in thenext 6 months (compared to 48% in our last survey in June 2011) while 7% expect asignificant improvement (up from 0% in theprevious edition) (Figure 23). This indicates afeeling of increased trust in thestabilization of theeconomy over thenext six months. Traditionally, Romanias economic growth has been closely linked to Foreign Direct Investment. After steady drops in interest over thepast years, new investment plans, together with arevival of local consumption and increase in exports, are extremely good news. Retail/ Trade, Energy and Resources, and Manufacturing, thekey industries represented by theexecutives in this survey, are among theindustries with thehighest potential in themonths to come. In this context of asovereign debt crisis, economic policies have become essential for both foreign and local investors. Last months decision of Finnish-based Nokia to close down its Romanian plant is themost recent evidence that Romania is steadily losing its low-cost advantage in favour of less developed countries in South America, Africa or Asia. Themove, annulling one of themost important foreign investments in Romania over thepast several years (Nokia was thesecond largest exporter in Romania in 2010), was warning enough for thecountrys government. Asthecountry is facing fierce, intensifying global competition, itmust balance therisk of losing investments with thebenefits of gaining new ones.

Figure 23: General prospects of Romanias economy in thenext 6 months 100% 80% 60%
23 30 25 27 48 55 38 50 37 39 34

47

40% 100% 20% 80% 0% 60% 3Q 09

38

25

27

33 13 10

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Positive (Improve significantly and Improve somewhat) 40% Stay the same 100% Negative (Detoriorate somewhat and Detoriorate significantly) 20% Q: Generally speaking, how do you feel about the financial prospects for your company now? Are they 80% 0% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11 60% Figure 24: Prospects for sales revenues over thenext 12 months 40% 100% 20% 80% 0% 60% 40% 100% 20%
23 38 58 53 60 58 59

3Q 09
35

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

17

30

27

26 38

80% 0% 60%

25

13 4

13

16

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1Q 10

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4Q 11

Positive (Increase significantly and Increase somewhat) 40% Stay unchanged Negative (Reduce somewhat and Reduce significantly) 100% Dont know 20% 80% Q: In 12 months time, do you expect your revenue from sales to 0% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 60% 40% 16 100% 20%

4Q 11

100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60% 40% 100% 20% 80% 0% 60% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

New construction projects, infrastructure works and agriculture development, supported by theaccelerated absorption of EU structural funds, are theimmediate solutions to balance theloss of Nokia, which could translate into anestimated 0.1 0.2% drop in GDP. Locally, theRomanian business environment still has some cards to play provided itinvests in innovation and differentiation. Overall, executives express growing confidence in theeconomy and especially consumption, as59% expect improved sales figures over thefollowing 12 months. At thesame time, thepercentage of executives budgeting lower sales for their firms has reduced from 16% in June 2011 to 3% in thecurrent edition. Credit availability has also somewhat diminished over thepast six months, with almost aquarter of respondents (24%) admitting that credit is currently hard to get compared to the6% who felt this way in June. This reflects amore cautious approach from banks astherisk of double-dip recession and new financial distress is increasing. Education and thequality of human resources are topics which have received more and more attention in recent months, asnow-mature companies realize that they need to invest more in their people aspart of their long-term strategic plan. While most businesspeople agree that talent is animportant quality in Romanian employees, further investment is needed in marketing and sales capabilities. Further, theneed to restructure compensation and benefits for employees in order to stimulate performance is going up on executives lists of priorities. Anincreasing majority of executives in this survey say that headcount at their firms will remain thesame over thenext year (72% versus 58% in June). Asmall share (3%) now expects to increase their workforce size significantly, up from no executives sharing this view in June. Asimilar percentage is, however, prepared to significantly reduce their workforce, which might indicate that thelabour market is adjusting.

40% Figure 25: Present availability of credit 20% 100% 0% 80% 60% 40% 100% 20% 80% 0% 60%
15

3Q 09 54

4Q 09
75

53 1Q 10

3Q 10
87

2Q 11
84

4Q 11
76

31 17 8

30

17

7 6

6 10

24

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40% Positive (Easily available and Somewhat available) Negative (Somewhat hard to get and Very hard to get) 100% Dont know 20% Q: How do you rate thepresent availability of credit for your company? Is it 80% 0% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 60% Figure 26: Changes in employment levels over thenext 12 months 40% 100% 20% 80% 0% 60% 40% 20% 100% 0% 80%
43 42 38 4 30 4 32 17

4Q 11

13

10

23

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50

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49

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58 2Q 11

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60% Positive (Increase significantly and Increase somewhat) Stay unchanged 40% Negative (Reduce somewhat and Reduce significantly) 100% Dont know 20% Q: How do you expect your firms total workforce to change in size over thenext 12 months 80% time? Will it 0% 60% 3Q 09 4Q 09 1Q 10 3Q 10 2Q 11 4Q 11 40% 20% 0%

3Q 09

4Q 09

1Q 10

3Q 10

2Q 11

4Q 11

Deloitte Business Sentiment Index

17

Special Economic Zones

Tomasz Konik Partner, Tax Special Economic Zones Leader

Special Economic Zones (SEZ) are designated areas within acountry in which business activity can be conducted on preferential terms. Taking Poland asanexample, itis thelargest market in Central Europe and has 14 SEZs. In turn, each SEZ has afew subzones which enables companies to benefit from these enhanced terms of business in different regions of thecountry. This means investors can carry out business activities in anumber of locations. In some cases where there are high-value investment projects or projects using innovative technologies, specific premises identified by aninvestor might be incorporated into anSEZ territory.
Figure 27: Was theavailability of public aid or tax deduction afactor in selecting thelocation of apast investment? 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0%
8% 12% 8% 11% 9% 3% 3% 67% 73% 58% 69% 67% 52% 83% 1% 8% 17% 19% 31% 6% 9% 3% 15% 17% 3% 14% 21% 10% 3%

Investors in Poland who conduct business activities in SEZs can receive state aid in theform of corporate income tax exemption up to acertain amount calculated using aregional aid map. Thebasis for calculating themaximum public aid available is via eligible costs. These consist of either investment costs (both tangible and intangible assets) or two-years of labour costs of new employees. ThePolish SEZ scheme has been operating for 16 years and has become areal magnet for new investments. Investment projects with atotal value in excess of PLN 73bn have been implemented within theSEZ territories in Poland. This has resulted in thecreation of over 225,000 new jobs. What is important in thecontext of our survey is that according to European regulations, each country in thesample should calculate themaximum aid levels for companies according to thesame rules. Interestingly, theresults of our survey indicate that only 26% of respondents across theregion based their choice of location for apast investment project on theavailability of public aid. Only around 1% of felt that public aid had been adecisive factor, while 8% felt itwas quite important. Two-thirds (67%) of respondents indicated that public aid had not been taken into account at all when making adecision on investment location in thepast. Looking at theresults on acountry-by-country basis, thedifferences become evident. Executives in Poland, where public aid in theform of SEZs has been running for 16 years, seem to be themost focused on making use of thebenefits afforded by public aid. Themajority (66%) of Polish respondents indicated that public aid was at least one of many factors they took into account when deciding on investment location, of which 21% felt itwas quite animportant factor. Of all thecountries surveyed, executives in Romania had been theleast oriented on using public aid. Four-fifths (83%) of respondents in Romania said that public aid had been irrelevant when choosing aninvestment location.

Overall average

Croatia

Czech Republic

Hungary

Slovakia

Poland

Romania Romania

Overall Croatia Czech YES - most important factor average Republic YES - quite important factor YES - one of many factors

Hungary - not afactor Poland NO Slovakia Dont know

Figure 28: Was theavailability of public aid or tax deduction afactor 100% in selecting thelocation of apast investment? 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0%
67% 71% 74% 56% 1% 8% 17% 10% 12% 12% 3% 29% 8%

Overall average
8%

Retail/Trade
7%

Energy & Resources

12%

Manufacturing
6%

Overall average

Retail/Trade

Energy & Resources NO - not afactor Dont know

Manufacturing

YES - most important factor YES - quite important factor YES - one of many factors 18

In terms of industries, thegreatest interest in public aid was noted in Manufacturing. One third (37%) of Manufacturing respondents answered that aid was at least one of many factors considered in aprior investment, compared to 22% in Retail/Trade and 15% in Energy and Resources who expressed this outlook. This could be asaresult of thecapital-intensive and long-term nature of investments in theManufacturing industry, thekind of investments to which SEZs are often particularly tailored. We foresee that public aid through SEZs should be more prominent in theCentral European region in thecoming years due to thefact that itis aninvestment incentive that offers theregion advantages over locations in Asia and Africa. Theresults of this survey indicate that public aid is apositive factor in Poland (67%) and theCzech Republic (62%), where themajority of executives consider theavailability of public aid to be at least one of many factors they will consider when deciding on aninvestment location in thefuture. Interestingly respondents from Slovakia (27%) and Romania (27%) did not reply in thesame way. In terms of industries, Manufacturing, asasector connected with significant investments, is once again most prepared to consider thebenefits afforded by public aid, with themajority (60%) of executives indicating that public aid will be at least one of many factors. Retail/ Trade executives represented thehighest share of those who consider public aid asat least quite animportant factor (22%). Theresults of thesurvey find apositive development overall in executives outlook on public aid. Across theboard, more executives expect to consider theavailability of public aid asat least one of many factors for afuture investment than had considered itfor previous investments. In line with these results, we expect public aid to become more important in Central Europe because countries in theregion are losing their most important competitive advantage, i.e. low labour costs. At thesame time, theregion is failing to catch up with its competitors in other parts of theworld. To boost competitiveness, countries in our region could, for example, improve thequality of their infrastructure and create cutting-edge businesses capable of providing competitive advantages.

To be fair, this lack of innovation is partly aresult of state budgets suffering asaconsequence of thefinancial crisis. Itcannot be denied, however, that on many levels Central Europe is still not able to compete successfully for investors (especially innovative ones), not only with theso-called old EU member states but also with Asian economies. Public aid should not be considered asaremedy for all weaknesses in our markets. Rather, itshould be viewed asaninstrument to keep investors interested in Central Europe, while also making efforts to create ahighlycompetitive economy in theregion.
Figure 29: Will theavailability of public aid be afactor in determining location of new facilities, remaining in agiven location or relocating to anew one? 100% 100% 80%
24% 3% 11% 9% 18% 12% 15% 11% 6% 14% 6% 21% 21% 3% 3% 21%

80% 60%
35% 45% 64% 63% 55% 69%

60% 40% 40% 20% 20% 0% 0%

6%

58%

38% 15% 6% 9%

34% 3%

Overall average

Croatia

Czech Republic

Hungary

Slovakia

Poland

Romania Romania

Overall Croatia Czech YES - most important factor average Republic YES - quite important factor YES - one of many factors

Hungary - not afactor Poland NO Slovakia Dont know

Figure 30: Will theavailability of public aid be afactor in determining location 100% of new facilities, remaining in agiven location or relocating to anew one? 100% 80% 80% 60% 60% 40% 40% 20%
55% 57% 38% 59% 3% 5% 11% 24% 17% 44% 17% 12% 15% 3% 6% 10%

20% 0% 0%

Overall average
6%

Retail/Trade
5%

Energy & Resources

12%

Manufacturing
2%

Overall average

Retail/Trade

Energy & Resources NO - not afactor Dont know

Manufacturing

YES - most important factor YES - quite important factor YES - one of many factors

Deloitte Business Sentiment Index

19

Regional snapshot
Figure 31: In six months time, doyou expect thegeneral prospects of your countrys economy to (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 100% 100% 59 55 57 49 54 44 57 40 40 40 100% 43 39 59 55 54 50% 27 40 40 49 26 33 26 40 20 44 16 50% 17 33 12 13 43 39 59 55 4 27 20 26 26 49 54 16 44 57 40 40 12 13 43 39 40 0 3 7 17 100% 4 50% 27 20 26 26 0 3 7 17 33 0% 16 12 13 0% 59 55 4 49 54 100% 44 57 -7 -7 -13 40 40 40 0 3 7 43 -19 -9 -13 39 50% -15 16 27-25 -23 -20 54 -17 26 33 26 0% -26 -7 20 -20 -9 55 49-15 -50% 17 -33 -39 13 43 -19 59 -13 -42 -26 40 -7 -13 -17 -46 44 57 12 -42 4 -20 39 -50% -42 -25 -23 -20 50% -42 40 40 27 20 26 0 3 7 -57 -33 -39 -48 33 -9 -13 -42 26 -7 -7 -13 -17 -46 16 -15 -42 -48 17 -26 0% -67 -77 -57 -33 12 13 -20 -19 4 -25 -23 -20 -50% -100% -42 -42 -90 -67 -77 -39 -42 0 3 7 -46 -48 -7 -7 -13 -100% 0% -57 -90 Overall average Croatia Czech -9 -13 Hungary-17 -26 -23 -20 -15 -20 -19Republic -50% -77 Overall average -42 -90 -67 Croatia -33 -39 Czech Republic -42 -100% -42 -25 -7 Hungary -7 -13 -46 -48 -20 -19 -9 -13 -17 -20 -15 -26 Positive (Improve significantly and Improve somewhat) -57 -33 -25 -23 average -50% Overall Czech Republic -42 Hungary -42 -39 -67 Croatia -46 -77 significantly) -48 Negative -100% -42(Deteriorate somewhat and Deteriorate -57 -90 -67 Croatia -77 Overall average Czech Republic Hungary -100% -90 Figure 32: Generally speaking, how doyou feel about thefinancial prospects for your company now? Overall average Croatia Czech Republic Hungary (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 100% 100% 61 61 58 56 58 50 53 47 50 48 43 40 47 40 46 47 51 61 61 50 100% 50 50% 34 47 50 40 53 39 26 37 58 56 58 50 48 43 40 47 40 37 46 47 51 40 37 39 50% 34 37 26 58 56 58 50 51 61 61 50 50 47 48 43 40 47 40 46 47 100% 40 53 39 37 50% 37 34 0% 26 61 61 50 0% 56 -6 50 0 58 58 100% 53 -3 -8 48 0 40 46 47 51 -7 47 50 40 -20 -3 -16 -3 0 -9 -6 -12 -16 43 -7 47 40 -14 37 0 39 50% -15 -11 -12 -12 -12 -8 37 34 -9 0% -7 -28 -27 -14 -7 -17 -20 -13 -20 61 61 26 -3 58 56 58 -12 -16 -50% -15 -11 -12 -12 -12 50 50 47 50 40 -17 -20 -13 53 -3 -16 -3 0 46 47 51 0 40 47 40 37 39 -50% -6 -12 48 43 -7 -28 -27 37 -8 50% -9 34 -7 -14 26 -16 -20 -16 -11 -12 -12 -12 0% -15 -17 -20 -13 -28 -27 -50% -100% 0 -3 -3 0 -9 -6 -12 -100% -7 -7 0% -15 -11 -12 -12 -12 -8 -16 Overall average Croatia Hungary -27 -14 -17 -20 -13 -20 -3 -16 Czech Republic -28 0 Hungary -50% Overall average -8 Croatia Czech -9 -6 -3 0 Republic -12 -100% -12 -12 -12 -7 -7 -14 -16 -16 -15 -11 -17 -20 -13 -20 -28 -27 -50% Overall average Croatia Czech Republic Hungary Positive (Definitely positive and Fairly positive) -100% Negative (Fairly negative and Definitely negative) Overall average Croatia Czech Republic Hungary -100% Overall average Croatia Czech Republic Figure 33: How doyou rate thepresent availability of credit for your company? Is it 100% (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 87 73 81 84 100% 73 83 64 68 83 75 78 81 76 84 87 73 58 68 75 78 81 76 59 63 67 73 83 64 68 83 81 100% 59 63 67 58 68 50% 83 81 84 87 73 35 83 64 81 76 78 50% 35 68 67 73 68 75 59 63 58 100% 50% 81 84 87 73 35 0% 73 83 64 68 83 75 78 81 76 0% 100% 59 63 67 58 68 87 83 81 84 -6 73 35 -15 -15 76 83 -17 64 68 -14 -13 -3 -6 -8 78 81 50% 0% -30 -21 -16 -15 -15 -16 -8 67 73 68 75 -16 -34 -33 -23 -23 -17 -24 -26 -14 -13 -3 -32 -50% 59 63 -23 -23 58 -21 -16 -24 -26 -30 -32 -50% 50% 35 -3 -6 -8 -15 -15 -16 -34 -33 -23 -17 -24 -26 -14 -13 -21 -16 0% -30 -32 -50% -34 -33 -23 -100% -6 -8 -100% -3 0% -16 -15 -15 Overall average -16 Croatia -17 -24 -26 -14 -13 Republic Czech -30 -21 -32 -33 -23 -23 -50% -6 Overall average Croatia Czech Republic -8 -100% -15 -15 -16 -34 -13 -3 -17 -24 -21 -16 -26 -14 -23 -23 -30 Overall average -32 -50% Czech Republic -34 -33 Croatia -100% Positive (Easily available and Somewhat available) Overall average Croatia Czech Republic -100% Negative (Somewhat hard to get and Very hard to get) Overall average Croatia Czech Republic Hungary 83 57 83 66 67 57 83 66 67 66 67 57 83 57 -3 66 67 -20 83 -31 67 -3 66 -33 57 -20 -3 -31 -33 -20 -31 -33 -3 -20 Hungary -31 Hungary -33 -3 -20 -31 Hungary -33 Hungary Hungary 69 69 69 69 69 -20 -20 -20 -20 -20 53 53 53 53 53 -37 -37 -37 -37 -37 84 71 84 47 71 84 36 47 71 23 36 12 23 12 47 36 84 23 71 12 0 84 47 71 36 -13 -6 0 23 -28 -13 -6 12 47 -43 -28 0 -52 36 23 -43 -13 -6 12 -52 -28 -43 0 -52 -13 -6 Slovakia 0 -28 Slovakia -43 -13 -6 -52 -28 Slovakia -43 -52 Slovakia Slovakia 63 57 47 63 57 47 63 57 47 63 57 47 -17 63 -20 -19 -17 57 47 -20 -19 -17 -20 -19 77 74 67 77 74 67 77 74 67 77 74 67 77 74 -3 -10 -16 67 -3 -10 -16 -3 -10 -16 74 74 63 51 74 74 63 55 51 55 74 74 63 51 55 7 7 74 74 63 51 -4 0 -3 55 7 74 74 63 -16 -4 0 -3 -15 51 55 -15 7 -16 -4 0 -3 -15 -62 -16 7 -62 -4 0 -3 -16 Poland -15 -62 -4 0 -3 Poland -15 -16 -62 Poland -62 Poland Poland 91 77 70 71 80 91 79 79 77 70 71 80 91 79 77 70 71 80 91 79 77 70 71 80 0 0 91 0 80 0 79 77 70 -9 0 -12 -4 71 0 -12 -4 -9 0 0 0 -12 -4 -9 0 0 -12 -4 -9 Poland 0 Poland 0 -12 -4 -9 Poland Poland Poland 86 89 72 85 89 77 85 86 77 85 72 85 89 77 85 86 72 85 89 77 72 85 0 89 77 72 85 -9 -10 0 -9 -10 -23 -23 0 -9 -10 -23 0 -9 -10 -23 Poland 0 -9 -10 Poland -23 Poland Poland Poland 79 81 80 77 82 76 79 81 80 77 82 76 79 81 80 77 82 76 79 81 79 81 -19 -21 -19 -21 -19 -21 -21 80 77 80 77 -17 -20 -17 -20 -17 -20 82 76 82 76 -18 -24 -18 -24 -18 -24 85 86 85 86 -9 -7 -9 -7 -9 -7 -9 -7 -9 -7 0 0

47 38 50 47 37 39 34 38 50 37 39 34 47 38 50 37 39 34 47 38 50 37 -13 -10 39 34 -25 -27 -33 -13 -10 47 -38 -25 -27 -33 39 34 38 50 37 -38 -13 -10 -25 -27 -33 -38 -10 Romania-13 -25 -27 -33 Romania-13 -10 -38 -25 -27 -33 Romania -38 Romania Romania 63 38 20 63 15 38 20 63 15 38 20 15 63 38 20 -23 -25 -23 -13 63 -13 15 -23 -25 -23 38 20 15 -23 -25 -23 -13

48 48 31 31 48 31 48 -6 -6 -17 31 48 -17 -6 31 -17

-3 -17 -10 -16 Slovakia -20 -19 Slovakia -3 -17 -10 -16 -20 -19 Slovakia Slovakia Slovakia 88 73 81 81 88 53 73 81 81 88 53 73 81 81 53 88 73 81 81 88 53 -17 -13 -16 -9 73 81 81 -36 -17 -13 -16 -9 53 -36 -17 -13 -16 -9 -36 -17 -13 -16 -9 Slovakia -36 Slovakia -17 -13 -16 -9 -36 Slovakia Slovakia Slovakia 71 70 60 58 53 55 71 70 60 58 53 55 71 70 60 58 53 55 71 70 60 58 53 55 71 70 60 58 53 55 -27 -36 -40 -36 -40 -45 -29 -27 -29 -40 -40 -45 -27 -36 -40 -40 -45 -29 Slovakia -36 Slovakia -29 -27 -40 -40 -45 -36 Slovakia -29 -27 -40 -40 -45 Slovakia Slovakia 53 42 53 58 61 52 53 42 53 58 61 52 53 42 53 58 61 52 53 42 53 58 61 52 -10 61 52 53 58 -19 -12 53 42 -20 -10 -19 -12 -20 -25 -20 -20 -25 -20 -10 -19 -12 -20 -25 -20 -10 Slovakia -19 -12 -20 -25 Slovakia -20 -10 -25 Slovakia -19 -12 -20 Slovakia Slovakia

-6 -17 Romania -23 -25 -23 -13 Romania -6 -13 -17 -23 -25 -23 Romania Romania Romania 87 84 76 75 54 75 53 87 84 76 53 87 54 84 76 75 53 54 87 84 76 75 53 54 -7 -6 76 87 84 -17 75 -6 -24 53 54 -31 -17 -30 -7 -30 -7 -6 -24 -31 -17 -24 -30 -31 -7 -6 -17 Romania -24 -30 -31 Romania -6 -7 -17 -24 -30 -31 Romania Romania Romania 84 65 67 67 70 84 69 69 65 67 67 70 84 69 65 67 67 70 84 69 65 67 67 70 84 67 65 -25 67 70 -16 69 -31 -25 -30 -30 -16 -31 -31 -30 -30 -31 -25 -30 -30 -16 -31 -31 Romania -25 -30 -30 -16 -31 Romania -25 -30 -30 -16 -31 Romania -31 -31 Romania Romania

100% Figure 34: Looking in general at your companys debtors and outstanding dues - how would you evaluate 75 71 69 100% 73 63 67 63 70 61 59 56 59 they are currently taking to pay? Is theaverage55 75 71 days of payment 67 54 70 61 thetime number of 69 52 47 73 63 52 62 55 54 59 56 59 63 62 40 47 100% 50% (Percentage63 respondents - 3Q 09/4Q 40 4710/3Q 10/2Q 11/4Q 11) 71 69 52 47 73 of 70 61 38 27 20 09/1Q 30 52 75 38 27 30 63 67 54 50% 59 56 59 20 52 47 52 62 55 47 40 38 27 100% 30 50% 70 61 75 71 69 0% 20 73 63 67 54 59 56 59 63 62 55 0% 100% 52 47 40 47 30 52 70 61 38 75 71 69 67 73 63 50% 27 20 54 59 56 59 -35 -30 0% 62 55 -25 -29 -31 52 47 -20 63 52 -50% -38 40 47 30 -42 -38 -42 -25 -29 -31 -43 -20 -38 -33 -40 -50% -39 -39 -37 -35 -30 -38 38 27 -38 -42 50% -38 -33 -53 -37 -45 -43 20 -53 -53 -70 -42 -39 -39 -40 0% -25 -29 -31 -45 -20 -38 -30 -38 -59 -67 -77 -53 -50% -59 -67 -70 -42 -38 -42 -37 -35 -100% -43 -33 -40 -77 -53 -53 -100% -39 -39 -45 0% -70 Overall average Croatia Czech Republic -31 Hungary -25 -29 -20 -38 -30 -38 -59 -67 -77 -50% -38 -42Republic Overall -35 Croatia Czech -100% -39 -39 -37 average -43 Hungary-33 -40 -42 -45 -53 -53 -20 -38 -30 -50% Overall average -38 -59 -67 Croatia Czech -25 -29 -70 -42 -38 -42Republic -31 -37 -35 -43 Hungary-33 -40 -77 -100% -39 -39 -45 -53 -53 -59 -67 -70 -77 Overall average Croatia Czech Republic Hungary -100% Overall average Croatia Czech Republic Positive (Definitely safe and Fairly safe) Negative (Somewhat excessive and Significantly excessive) 100% 100% 47 60 55 53 55 57 63 50 53 39 50 52 100% 45 53 55 57 63 50 31 47 33 47 60 55 53 39 50 52 50% 45 Figure 35: In 12 months 63 time, doyou 47 33 your revenue16 expect from sales to 50% 55 16 53 50 31 47 53 55 57 respondents - 3Q 09/4Q 47 6010/3Q 10/2Q 11/4Q 11) 52 39 50 33 09/1Q 100% 45(Percentage of 31 50% 0% 16 60 55 55 57 63 50 0% 100% 45 53 53 39 50 52 47 33 47 -13 -9 -13 50% -22 -15 -15 -13 -12 31 0% 50 -16 47 60 -9 16 53 39 -25 52 53 55 57 63 50 -50% -21 -22 -15 -15 -13 -12 -31 47 -27 -23 -13 55 -39 -23 -13 -25 -16 45 33 -23 -23 -50% -21 31 -43 50% -13 -9 -39 16 -15 -15 -13 -12 -31 -43 -27 -13 -25 -16 -22 0% -23 -50% -31 -43 -27 -23 -100% -21 -39 -100% 0% -13 -9 -22 -15average -12 Overall -15 -13 Croatia Czech -25 -16 -23 -13Republic -23 -50% -100% -21 Overall average -12 -31 -43 Croatia -13 -9 -39 Czech Republic -27 -22 -15 -15 -13 -25 -16 -23 -13Republic -23 -50% -21 Overall average -31 -43 Croatia -27 -39 Czech -100% Overall average Croatia Czech Republic -100% Overall average Croatia Czech Republic Positive (Increase significantly and Increase somewhat) Negative (Reduce somewhat and Reduce significantly) Hungary 46 46 46 46 -27 46 -27 -27 -27 -27 63 59 63 45 63 60 59 63 29 60 45 63 60 59 63 29 45 29 63 60 59 63 45 -7 29 -10 63 -13 -16 63 -14 -7 60 59 -10 -7 -13 -16 -7 -14 45 29 -10 -7 -13 -16 -7 -14 -10 -7 -13 -16 -7 -14 Hungary -10 -7 Hungary -7 -14 -13 -16 Hungary Hungary Hungary

-19 -17 -20 -18 Poland -24 Poland -19 -17 -20 -18 -21 -24 Poland Poland Poland 89 74 89 70 74 59 70 59 89 74 70 59 89 74 70 59 89 74 -7 -3 70 -9 59 -3 -3 -3 -9 -7 -9 -7 -3 -3 85 85 62 85 62 62 85 62 85 -9 -10 62 -9 -10 -9 -10

-9 -7 -3 -3 -9 -10 Poland -3 -3 -9 -7 Poland -9 -10 Poland Poland Poland

58 53 60 58 59 38 58 53 60 58 59 38 58 53 60 58 59 38 58 53 60 58 59 -3 38 -16 -13 -25 -13 -13 -16 -3 -23 58 53 60 58 59 -13 38 -25 -23 -3 -13 -13 -16 -23 -25 -3 -13 -13 Romania -16 -23 -25 Romania -3 -13 -13 -16 -23 -25 Romania Romania Romania

20

Figure 36: How doyou feel about prospects for launching new products, services or new ways of client service by your company over thenext 12 months? (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 100% 100% 57 61 60 64 69 61 57 61 60 64 69 61 61 67 57 63 63 67 61 67 57 63 63 67 67 67 67 -27 -27 -27 -27 -27 65 56 68 54 45 52 65 56 68 54 45 52 65 56 68 45 52 65 56 68 54 54 45 52 65 56 68 54 52 45 -38 -29 -34 -26 -38 -29 -34 -26 -38 -45 -45 -38 -29 -34 -26 -38 -45 -38 -29Republic Czech -34 -26 Czech Republic -38 -45 -38 -38 -29 -34 -26 -38 -45 Czech Republic Czech Republic 67 67 58 57 67 63 67 49 63 58 57 49 67 58 57 67 58 57 67 58 57 -27 -39 -30 -27 -30 -39 63 67 49 63 67 49 67 63 -28 -30 49 -28 -30 -34 -34 77 65 64 53 58 53 65 77 64 53 58 53 77 65 77 64 53 58 53 65 64 53 58 53 77 65 -19 64 58 53 -31 53 -29 -19 -24 -37 -24 -40 -29 -37 -31 -40 -29 -19 -24 -37 -31 -40 Slovakia -19 -24 -29 -37 -31 -40 Slovakia -19 -24 -29 -37 -31 -40 Slovakia Slovakia Slovakia 85 77 80 82 63 85 77 80 82 79 79 63 85 77 80 63 85 77 80 63 85 77 80 -10 63 -15 -14 -30 -15 -14 -10 -30 -10 -15 -14 -10 -30 -15 -14 Poland -30 Poland -14 -10 -15 -30 Poland Poland Poland 82 79 82 79 82 79 -15 -15 -21 -21 -15 -21 -15 -21 -15 -21 60 55 55 62 62 50 37 60 55 55 50 37 60 55 62 50 37 60 55 62 50 37 -15 60 -26 62 55 50 -15 -29 37 -30 -26 -29 -43 -30 -43 -15 -26 -15 -29 -43 -30 -26 -29 Romania -30 Romania -43 -15 -29 -30 -26 -43 Romania Romania Romania 55 55 55 -38 -38 -38 -38 -38

50% 100% 50% 100% 57 61 60 64 69 61 61 67 57 63 63 0% 57 61 60 64 69 61 61 67 57 63 63 50% 100% 0% 50% 57 61 60 64 69 61 -21 67 57 63 63 61 -30 -33 -50% -32 -29 -32 -27 -25 -30 -21 -30 0% -43 50% -50% -32 -29 -32 -27 -25 -30 -30 -43 -30 -33 0% -100% -29 -32 -27 -25 -30 -21 -30 -30 -33 -50% 0% -100% -32 -43 -30 -21 Overall -27 -25 Croatia -50% -32 -29 -32average -30 -30 Croatia -33 Overall average -43 -100% -32 -29 -32optimistic and Fairly optimistic) -30 -33 Positive (Definitely -27 -25 -30 -21 -30 -50% -43 -100% Negative (Reduce somewhat and Reduce significantly) Overall average Croatia Overall average Croatia -100%

-27 -28 -30 -34 -39 -30 -27 -28 Hungary -39 -30 Hungary -30 -34 -27 -28 -30 -34 -39 -30 Hungary Hungary

Figure 37: How doyou expect your firmsCroatiaworkforce to change in size over thenext 12 months time? total Overall average Czech Republic Hungary (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 100% 100% 39 50% 27 26 27 25 29 22 30 100% 25 23 23 50% 13 19 19 39 27 26 27 13 25 23 23 12 16 18 25 29 22 10 17 10 20 100% 13 3 13 19 19 17 7 10 20 30 12 16 18 10 7 0% 3 39 50% 100% 0% 27 26 27 25 29 22 25 23 20 30 39 50% 13 19 19 -19 27 -16 27 13 -16 23 -17 12 16 18 25 -24 -20 10 17 29 10 -23 -18 26 30 3 13 -29 -34 -19 -27 -16 -20 -20 -16 -30 -17 22 19 13 25 23 23 -50% -36 16 -35 -29 -24 -20 17 7 -30 -23 -18 -40 -29 19 39 -27 12 -36 18 -29 -20 -20 10 20 0% -40 -43 -30 50% 7 -50% -36 3 -35 25 29 22 10 -40 -43 27 26 27 13 25 -30 23 30 -45 -40 19 -34 -55 23 19 20 0% 16 12 -36 18 -55 17 7 10 -23 -18 -45 13 -16 -20 10 3 -100% -20 -20 -16 -30 -17 -29 -34 -19 -27 -29 -24 -50% -30 0% -100% -36 -36 -35 -19 -40 Croatia -23 -18 -45 -40 -29Republic -27 -16 -20 -20 -16 -30 -17 -24 -20 -43 Czech -34 Hungary -29 -50% -36 Overall average -30 -55 -40 Croatia -40 Overall Hungary -36 -35 average -20 -43 -23 -18 -45 Czech Republic -27 -16 -20 -20 -16 -30 -17 -29 -34 -19 -55 -29 -24 -100% -50% -36 -30 -40 -40somewhat) -36 -35 -43 Positive (Increase significantly and Increase -45 Czech Republic -100% Overall average Croatia Hungary -55 Negative (Reduce somewhat and Reduce significantly) Overall average Croatia Czech Republic Hungary -100% Overall average Croatia Czech Republic Hungary Figure 38: Compared with thelast 12 months, how doyou expect your firms spending on capital goods 100% (equipment, ITsystems, new buildings, etc.) to change during thenext 12 months? Will it 100% (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 47 47 41 43 41 39 38 50% 34 33 35 27 47 23 47 36 30 34 41 43 36 100% 26 23 25 30 34 50% 36 10 33 35 41 39 38 36 19 30 34 23 10 27 26 23 13 25 30 100% 19 10 10 13 47 0% 47 41 43 41 39 38 50% 36 34 100% 33 35 27 47 23 47 36 0% 30 34 41 -3 -6 26 23 -13 -13 -13 -14 25 30 43 -9 19 30 -18 -19 -11 36 35 41 39 38 34 50% 10 27 -10 -23 -3 36 10 33 -23 -19 -19 -23 23 -6 30 34 -29 -18 -19 -11 -9 26 -27 13 25 -13 -14 -50% -39 19 23 13 47 41 43 10 -30 -10 -23 47 36 10 -37 -23 -19 -19 -23 -32 -27 -13 -13 41 39 38 -32 0% 50% 36 -45 -30 34 23 -50% -39 -29 34 33 35 27 30 26 23 25 30 -3 -6 -60 -37 19 0% -9 -45 10 10 13 -13 -13 -13 -14 -10 -60 -18 -19 -11 -19 -23 -100% -27 -23 -19 -29 -13 -14 -30 -10 -23 -3 -6 -11 -9 -32 -50% -13 -13 0% -18 -19 -19 -100% -39 -37 -23Republic -23 -23 -45 -30 Croatia -3 -6 Overall average Czech -19 -32 -27 Hungary -13 -50% -39 -29 -60 -37 -13 -13 -14 Overall average -9 -45 Croatia Czech Republic Hungary -10 -18 -19 -11 -19 -23 -27 -23 -23 -19 -60 -29 -30 -100% -39 -32 -50% -37 -45 -100% Overall average Croatia Hungary -60 Czech Republic Overall average Croatia Czech Republic Hungary -100% Positive (Increase significantly and Increase somewhat) Overall average Croatia Czech Republic Hungary Negative (Reduce somewhat and Reduce significantly) 100% 100% Figure 39: Would you say that adecision by your company to acquire another company over thenext 12 months is (Percentage of respondents - 3Q 09/4Q 09/1Q 10/3Q 10/2Q 11/4Q 11) 50% 100% 50% 17 13 13 20 20 15 10 10 13 22 16 8 15 10 13 15 17 14 6 0 3 0 13 100% 17 13 13 20 20 15 10 10 13 22 16 8 15 10 13 15 17 14 6 0 3 0 13 0% 50% 100% 0% 22 17 13 13 20 20 15 10 10 13 15 10 13 15 17 14 50% 16 8 6 0 3 0 13 -50% 17 13 13 20 20 15 10 10 13 22 16 8 15 15 17 14 0% 6 50% 3 0 13 -50% -60 10 13 -52 22 -62 -62 -62 -67 -63 20 -57 -55 -68 -60 -52 -59 -58 -54 -68 0 -59 0% 17 13 13 20 15 10 10 13 15 -64 -63 -64 17 14 16 -54 13 10 13 15 6 0 3 0 -67 -59 -58 8 -100% -60 -64 -63 -64 -62 -62 -62 -67 -63 -77 -57 -55 -68 -60 -68 -70 -70 -59 -67 -70 -70 -50% 0% -77 -100% Overall average Croatia Czech Republic -54 Hungary -52 -50% -60 -59 -64 -63average -62 -62 -67 -63 Overall -64 -62 Croatia -57 -55 -68 -60 -52Republic -54 -68 -70 Hungary -67 Czech -59 -58 -70 -100% -60 -64 -63 -64 -62 -62 -62 -67 -63 -77 -57 -55 -68 -60 -59 -58 -50% -68 -70 -70 -59 -67 -77 -52Republic -54 -100% -60 Overall average -62 -62 -60 Croatia -57 -55 Czech -59 -58 Hungary -64 -63 -64 -62 -68 -70 -70 -59 -67 -68 -67 -63 Overall average Croatia Czech Republic Hungary -77 -100% Overall average Croatia Positive (Extremely likely and Somewhat likely) Negative (Somewhat unlikely and Extremely unlikely) 100% 100% Czech Republic Hungary

45 32 45 20 10 8 20 32 10 8 32 45 20 45 10 8 20 32 -19 -35 45 10 -36 8 -37 -36 -37 -35 -19 32 20 -37 -37 10 8 -19 -35 -37 -36 -37 Slovakia -19 -36 -37 -35 Slovakia -19 -37 -35 -37 -36 -37 Slovakia Slovakia Slovakia 52 52 42 42 22 33 10 22 33 10 52 42 22 33 52 -13 42 10 22 33 -13 -13 -13 52 10 -39 -30 42 33 -43 -39 -30 -43 22 10 -13 -13 -30 -13 -13 -43 -39 -30 Slovakia -13 -43 -39 Slovakia -13 -39 -30 -43 Slovakia Slovakia Slovakia

30 30 30 -21 30 -21 30 -21 -21 -21

40 34 40 22 14 22 34 14 34 40 22 40 34 -27 14 -26 22 14 -26 -41 -40 -27 34 40 -40 -41 22 14 -27 -26 -41 -40 -27 Poland -26 -41 -40 Poland -27 -26 -41 -40 Poland Poland Poland 52 30 52 30 52 30 52 30 -23 -19 52 -23 -19 30

36 36 10 10 36 36 -21 -21 10 10 -21 -21 36 10 -21 -21 -21 -21 -21 -21

23 8 13 10 23 10 10 10 10 8 13 10 8 8 -42 -42 8 13 10 23 10 -17 10 13 10 23 10 10 -38 -43 -30 -32 -17 -38 -43 -30 -32 13 10 23 10 10 -30 -32 -17 -42 -38 -43 -30 -32 -17 Romania -38 -43 Romania -42 -30 -32 -17 -42 -38 -43 Romania Romania Romania

36 36 36 -6 36 -6 36 -6 -6 -6

67 43 67 58 48 58 43 48 67 58 43 67 48 58 43 -7 -6 -17 -3 48 -6 67 -3 -7 43 -17 58 48

-3 -7 -6 -23 -19 -6 -17 -3 -7 -17 -19 -23 Poland -6 -17 -3 -7 Poland -23 -19 Poland Poland Poland

33 37 42 19 25 33 37 42 24 24 19 25 33 37 42 24 0 25 42 19 -17 33 37 -13 0 19 25 -35 -17 -30 -33 -13 24 33 37 -35 25 -30 -33 42 24 0 19 -13 -17 -30 -33 -13 0 -35 -17 -30 -33 Romania 0 -35 Romania-13 -17 -30 -33 -35 Romania Romania Romania

6 6 6 6 -74 6 -74 -74 -74 -74

10 10 10 10

6 6

7 7

13 13

3 3

9 9 9 9 -61 9 -61 -61 -61 -61

30 22 29 23 36 31 30 22 29 23 36 31 30 22 30 22 -42 30 22 -42 -56 -56 29 23 36 31 29 23 36 31 29 -50 36 31 23 -57 -50 -52 -55 -52 -55 -57

12 12 12 12 -58 12 -58

8 8 8 8 -63 8 -63

10 10 10 14 10 10 10 14 14 14 14 -72 -72 -72 -72 -72

13 6 7 13 3 6 7 3 -70 -67 -73 -65 -77 10 6 7 13 3 -70 -67 -73 -65 -77 Slovakia Slovakia -70 -67 -73 -65 -77 -67 -73 -65 -70 -77 Slovakia -70 -67 -73 -65 -77 Slovakia Slovakia

-42 Poland -52 -50 -55 -42 -56 -57 -50 Poland -52 -55 -56 -57 -42 -56 -57 -50 -52 -55 Poland Poland Poland

10 10 10 10 10 10 -61 -67 -77 -61 10 10 10 -67 -77 Romania -58 -63 Romania -61 -58 -63 -67 -77 -61 -67 -77 -58 -63 Romania -61 -67 -77 Romania Romania

50% Figure 40: Doyou generally expect theregulatory environment in your country in 12 months time to be 100% 50% 17 9 7 7 18 respondents - 3Q 09/4Q 10 10 09/1Q 9 (Percentage of 8 12 6 10 6 16 6 7 13 6 7 3 100% 17 7 10 10 3 10/3Q 10/2Q 11/4Q 11) 3 4 9 7 7 18 8 12 6 10 6 16 3 4 6 7 13 6 7 3 7 0% 3 9 50% 100% 0% 18 -7 -17 17 12 16 -19 -23 50% 9 7 -20 7 -10 7 18 8 -22 9 6 6 -23 13 6 7 3 7 10 10 3 -15 -16 10 6 3 4 -50% -28 -23 -20 -29 -25 -22 -34 -20 -7 -17 -23 -15 -16 -23 -32 -34 -19 -23 -39 -23 -10 -38 -33 -37 17 -20 10 10 -23 9 9 7 10 6 16 6 7 3 0% 8 12 6 -23 -32 -34 3 4 -39 7 13 -38 -33 -37 6 7 50% 3 -50% -28 -23 7 -29 -25 -34 0% 17 9 7 -20 18 8 12 7 13 10 10 3 9 7 6 6 -23 -10 6 7 3 7 -7 -17 -23 -15 -16 10 6 16 -19 -23 3 4 -100% -23 -33 -25 -22 -23 -20 -50% 0% -100% -28 -23 -20 -29 -34 -20 -7 -17 -23 -15 -16 -23 -32 -34 -19 -23 -39 -23 -10 -38 -33 -37 Croatia Czech Republic Hungary -32 -34 -29 -25 -22 -50% -28 Overall average -39 -37 -10 -38 -7 -17 Overall average -22 -34 Croatia Czech Republic Hungary -20 -23 -15 -16 -23 -32 -34 -19 -23 -39 -23 -20 -100% -28 -23 -29 -25 -50% -38 -33 -37 -34 -100% Overall average Croatia Czech Republic Hungary Overall average Croatia Czech Republic Hungary -100% Overall average Croatia Czech Republic Hungary Positive (Significantly less restrictive and Somewhat less restrictive) Negative (Somewhat more restrictive and Significantly more restrictive)

7 7 7 -30 7 -30 7 -30 -30 -30

24 13 24 13 42 24 42 -13 13 -9 -25 -27 -13 -16 24 0 0 13 -25 -27 42 -16 -9 0 0 24 13 0 0 -13 -16 -9 -25 -27 -13 -16 -9 -25 -27 Slovakia Slovakia -16 -9 -13 -25 -27 0 0 0 0 Slovakia Slovakia Slovakia

42 42

9 11 6 13 12 10 9 11 6 13 12 10 9 11 6 12 -21 -19 -23 13 -27 -21 -19 -23 -37 -27 9 11 6 13 12 -37 11 6 13 12 9 -21 -19 -23 -27 -21 -19 -23 -37 -27 Poland -37 Poland -19 -23 -21 -37 -27 Poland Poland Poland 10 -28 10 -28 10 -28 -28 -28

12 13 12 13 12 -35 12 -35 12 -35 -35 13 -25 13 -25 13 -25 -25

7 7

24 20 20 10 24 10 24 -17 24 -17 24 -17 -17 -17

20 10 7 -23 20 -29 -23 -33 -29 10 7 -33 20 10 7 -23 -29 -23 -33 -29 Romania -33 Romania -25 -23 -33 -29 -35 Romania Romania Romania

Deloitte Business Sentiment Index

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Thought leadership

Central Europe Top 500 www.deloitte.com/cetop500 TheCE Top 500 report ranks the500 largest companies in theregion and provides commentary and insights on regional trends from Deloittes professionals and leading executives from some of themost prominent businesses across theregion. Themajor themes in this years Deloitte CE Top 500 report were growth, performance and innovation.

Central Europe CFO Survey www.deloitte.com/cecfo TheDeloitte Central Europe CFO Survey provides theCentral European business community with anobjective overview of some of thefactors at play in driving theregions businesses forward. Asthefirst edition of arolling bi-annual survey, itwill also contribute over time to anevolving source of knowledge and insight to thechanging dynamics of theCentral European business landscape.

Technology Fast 50 www.deloitte.com/fast50ce Deloitte Central Europe launched its first Technology Fast 50 ranking in 2000. This prestigious annual award honours thefastest-growing Central European technology companies based on thepercentage of revenue growth over afive-year period. Theprogramme draws attention to theregions innovation in thetechnology sector. This competition is aDeloitte initiative on aregional and global level that aims to draw attention to fast-growing companies and to highlight companies who are just establishing themselves on themarket.

Investing in Central Europe www.deloitte.com/investince Thekey drivers for investors making cross-border direct investments are usually either to gain access to new and growing markets, or to reduce costs. Thecountries of Central Europe (CE) score highly on both. Thecountries of theCE region comprised in this publication include Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia.

More information on our recent publications can be found on www.deloitte.com

22

Contacts
Office Managing Partners Ahmed Hassan Balkans +40 (21) 2075260 ahhassan@deloitteCE.com Milo Macura PannonAdria +381 113812111 mmacura@deloittece.com Marek Metrycki Poland & Baltics +48 225110707 mmetrycki@deloittece.com Josef Kotrba Czech Republic & Slovakia +420 246042366 jkotrba@deloittece.com Regional Function Leaders Gavin Flook Audit +48 225110896 gflook@deloittece.com Jaroslav kvrna Tax +420 246042636 jskvrna@deloittece.com Rick Olcott Consulting +385 12351945 eolcott@deloittece.com Bla Seres Financial Advisory +36 14286936 bseres@deloittece.com Zbigniew Szczerbetka Enterprise Risk Services +48 225110799 zszczerbetka@deloittece.com Regional Industry Leaders Zbigniew Szczerbetka Financial Services +48 225110799 zszczerbetka@deloittece.com Bronislav Pnek Manufacturing +420 246042264 bpanek@deloittece.com Dariusz Nachya Technology, Media & Telecommunications +48 225110631 dnachyla@deloittece.com Diana Rdl Rogerov Real Estate +420 246042572 drogerova@deloittece.com Martin Buransk Public Sector +420 246042351 mburansky@deloittece.com Business Sentiment Index Contacts Bla Seres Hungary +36 14286936 bseres@deloittece.com Pter Szp Hungary +36 14286967 pszep@deloittece.com Rafa Antczak Poland +48 225110043 rantczak@deloittece.com Slaven uri Croatia +385 12352124 scuric@deloittece.com Diana Rdl Rogerov Czech Republic +420 246042572 drogerova@deloittece.com George Mucibabici Romania +40 212075255 gmucibabici@deloittece.com Peter Horovk Slovakia +421 258249207 phorovcak@deloittece.com Ivan Luica Slovakia +421 258249266 iluzica@deloittece.com Special Economic Zones Leader Tomasz Konik Poland +48 326030335 tkonik@deloittece.com

Central Europe Marketing Matthew Howell +420 234078558 mathowell@deloittece.com Anne Charlesworth +420 246042195 acharlesworth@deloittece.com Igor Bachinsky +420 246042254 ibachinsky@deloittece.com

Deloitte Business Sentiment Index

23

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With aglobally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering theinsights they need to address their most complex business challenges. Deloittes approximately 182,000 professionals are committed to becoming thestandard of excellence. Deloittes professionals are unified by acollaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy anenvironment of continuous learning, challenging experiences, and enriching career opportunities. Deloittes professionals are dedicated to strengthening corporate responsibility, building public trust, and making apositive impact in their communities.

For more information on theDeloitte Business Sentiment Index please visit:

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Deloitte is thebrand under which tens of thousands of dedicated professionals in independent firms throughout theworld collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL), aUK private company limited by guarantee. Each member firm provides services in aparticular geographic area and is subject to thelaws and professional regulations of theparticular country or countries in which itoperates. DTTL does not itself provide services to clients. DTTL and DTTL member firm are separate and distinct legal entities, which cannot obligate theother entities. DTTL and each DTTL member firm are only liable for their own acts or omissions, and not those of each other. Each of themember firms operates under thenames Deloitte, Deloitte & Touche, Deloitte Touche Tohmatsu, or other related names. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure theprovision of professional services in their territories through subsidiaries, affiliates, and/or other entities. Deloitte Central Europe is aregional organization of entities organized under theumbrella of Deloitte Central Europe Holdings Limited, themember firm in Central Europe of Deloitte Touche Tohmatsu Limited. Services are provided by thesubsidiaries and affiliates of Deloitte Central Europe Holdings Limited, which are separate and independent legal entities. Thesubsidiaries and affiliates of Deloitte Central Europe Holdings Limited are among theregions leading professional services firms, providing services through more than 3400 people in more than 30 offices in 17 countries. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With aglobally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering theinsights they need to address their most complex business challenges. Deloittes approximately 182,000 professionals are committed to becoming thestandard of excellence. 2011 Deloitte Central Europe