IMF Drastically Slashes Croatian GDP Growth Expectations

As Poslovni Dnevnik/Ana Blaskovic writes, the International Monetary Fund (IMF) has more than halved its growth forecast for the domestic economy to 2.7 percent this year due to the situation with the war in Ukraine. In its regular autumn forecasts for October, the IMF expected Croatian GDP growth of 5.8 percent. In 2023, growth should accelerate strongly to 4 percent.

While Croatian GDP growth will slow down, inflation should almost triple, from 2 to 5.9 percent. Next year, however, the International Monetary Fund estimates that price growth should slow down to 2.7 percent, which would almost return to the levels we experienced back in 2021.

In its latest forecast, the unemployment rate has been slightly adjusted to be lower, so the IMF now expects 7.7 percent, down a little from the previous 8 percent. In 2023, unemployment should still fall, down to 7.4 percent. Last year, that rate reached 8.2 percent, 0.2 percentage points lower than autumn’s estimates.

The IMF has positive expectations about the current account deficit, which it estimates will halve to 0.4 percent of GDP. Next year, the current account should be in the plus with a 0.3 per cent GDP surplus.

The Republic of Croatia is in the group of emerging European economies, which is forecast to fall by 2.9 percent, after last year’s growth forecast of 3.6 percent. In 2023, the IMF forecasts a recovery of 1.3 percent for emerging European economies.

The Fund also predicts a decline in economic activity for the entire Eurozone, which could rise by 2.8 percent this year (instead of 3.9 percent as was expected in January), and in 2023, it will likely slow down to further to 2.3 percent.

The biggest blow will more than likely be experienced by Germany, which will see its GDP grow by only 2.1 percent this year, 1.7 points less than previously expected. Due to the war in Ukraine, inflation across the Eurozone is expected to reach 5.3 percent and then weaken to 2.3 percent in 2023.

For more on Croatian GDP growth, make sure to check out our dedicated lifestyle section.

 

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