ZAGREB, July 11, 2019 – The Croatian National Bank (HNB) has increased its projection of economic growth this year to 3.1%, a HNB Council said in a press release on Wednesday.
The current indicators of economic activity and the expected growth of public and private investments as well as household consumption indicate that the growth rate of real GDP in 2019 could be 3.1%, the press release said.
The HNB’s forecasts at the end of last year projected a growth of 2.7%, while in spring it was decreased to 2.5%.
The latest increase is in line with the European Commission forecast published yesterday. The Commission revised its forecast of Croatia’s economic growth this year to 3.1% from the earlier projected 2.6%.
The HNB also estimates that employment growth and the decrease of unemployment could slow down very gradually, and that this year’s inflation rate could shrink to 0.7%.
The surplus on the current and capital accounts is expected at 3.1% of GDP and its reduction in comparison with last year is due to the deeper foreign trade deficit, whose effects are alleviated by the growth of the net export of services and higher absorption of EU funds, the press release said, adding that the relative indicators of foreign indebtedness therefore could slow down.
According to the government’s convergence programme, the general government’s deficit could be about 0.3% of GDP this year, while the European Commission forecasts a possible budget surplus, the HNB said.
The HNB will therefore continue to implement an expansionary monetary policy and support economic growth, while maintaining a stable kuna-euro exchange rate, the press release said, adding that the expansionary monetary policy and reduced interest on lending by domestic credit institutions resulted in stronger household lending.
The financial system remains moderately exposed to risks, the continuation of economic growth has a positive impact on structural imbalances, non-financial companies have better business results, and households’ currency clause and interest risks are being reduced, the HNB said, adding that the banking system remained highly capitalised and liquid.
More news about the Croatian National Bank can be found in the Business section.
