July the 8th, 2020 – The European Commission (EC) isn’t very optimistic as far as Croatia’s predicted GDP drop for 2020 is concerned, but is there light at the end of the tunnel for 2021, at least?
The ongoing coronavirus pandemic has been wreaking havoc with the global economy and Croatia’s, which is heavily reliant on tourism and hospitality, has been far from immune to these negative trends. The Croatian economy is heavily influenced by seasons, on top of that, with a drop in unemployment usually occurring at the tail end of March as business owners seek out waiters, chefs, cleaners, bar staff and more. This trend was stopped in its tracks before it could even gain any momentum by the pandemic.
April was an absolutely dire month for Croatia in every possible economic sense as lockdown saw consumption and hiring as we know it grind to a halt. Things are improving now, and in some sectors in a better way than we could have expected, but just what does the European Commission envisage for the rest of this year?
As Novac writes, Croatia will face even more severe consequences of the COVID-19 pandemic than previously thought. According to the latest forecasts published recently by the European Commission, the decline in GDP for Croatia this year will be as much as 10.8 percent, and next year the recovery will begin and growth will be 7.5 percent.
Only Italy with a drop of 11.2 percent and Spain, with a drop of 10.9 percent, will have a bigger drop than Croatia. Both of these popular Mediterranean countries which are also very tourism-oriented were hit tremendously hard by the virus. A similar category includes France, where GDP expected to fall by 10.6 percent, and Greece, the GDP of which is down by 9 percent.
From the above, it is evident that the countries for which tourism is one of the key branches will be the hardest hit. Poland, which should have a 4.6 percent drop, and Sweden, 5.3 percent, will feel the lightest of blows.
The latest report of the European Commission, along with the summer forecasts, states that the Croatian economy was more resilient before the outbreak of this crisis than it was before the global financial crisis back in 2008. The reports notes the fact that the growth of domestic demand will play the biggest role in Croatia’s overall recovery next year.
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