Italian bank Intesa Sanpaolo is the latest to lower the GDP growth forecast for Croatia this year.
Italian bank Intesa Sanpaolo has downgraded its forecast for the growth of the Croatian economy this year, from a previous 3.2 percent to 2.9 percent. It expects a further slowdown in 2018, with Agrokor’s crisis having a significant impact on the forecast, reports Poslovni.hr on 29 June 2017.
Intesa’s analysts released their new report on Thursday. They warned that the initial data from the second quarter of this year suggested less favourable results, given the negative impact of the crisis in Agrokor.
They say that the industrial production in April dropped by 0.6 percent, due to 4.3 percent drop in energy output and 3.2 percent decline in non-durable consumer goods production. As noted, this is partly linked to a year-on-year decline of 7.1 percent in food production, which is likely the result of the turmoil in Agrokor, Croatia’s largest privately-owned business group, which includes retail and food production companies.
“At the same time, the real retail growth has slowed down to 3.4 percent year-on-year, reflecting lower consumer confidence in April,” Intesa reported.
“In line with our expectations that the tourist season could partially neutralise the decline in personal spending and investment profile due to the demanding restructuring process of Agrokor, we have lowered our estimate of the growth of the Croatian economy in 2017 to 2.9 percent,” the Intesa report states.
Also, the bank points out that further growth slowdown is expected in 2018 since, as they note, “incentives from this year’s tax cuts will be reduced, while the restructuring of Agrokor will put additional pressure on stakeholders connected with the business group.”
Recently, some other analysts have also lowered their estimates of growth of the Croatian economy this year due to the Agrokor crisis. Among them is Addiko Bank which has reduced its GDP growth rate prediction from 3.5 percent to 3 percent.
For the same reason, the European Commission has reduced its estimate of the growth of the Croatian economy this year from 3.1 percent to 2.9 percent.
In its budget estimate late last year, the government planned budget revenues this year on the basis of the GDP growth of 3.2 percent.
