Is 2016 a good time to invest in Croatia?
Entrepreneurs and analysts from the banking sector are convinced that this year will be marked by a stable growth in Croatia. After a long period of deleveraging, it seems that this year will be a start of a new cycle of investment, both by citizens and by companies. Banks have announced a shift towards funding entrepreneurial projects, although in recent years they have not provided a strong support to entrepreneurs, since it was easier for them to finance the government, reports Vecernji List on February 7, 2016.
Given that the government has promised a better investment climate, a large number of entrepreneurs are ready to launch new investments. Some entrepreneurs even say that banks have started calling them and offering loans at much more favourable terms than during the crisis. Croatian Bank for Reconstruction and Development reportedly has up to seven billion kuna available for export projects and new investments, while the Croatian National Bank has reserved three billion kuna for entrepreneurs.
With such support, entrepreneurs are willing to invest. In a recent poll, 44 percent of entrepreneurs expected that this year will bring positive developments. “This year, we can see that banks are interested in providing loans to businesses”, says the head of the DIV Group Tomislav Debeljak. This is confirmed by Ilija Tokić from the Tokić Company who says he will invest 10 million euros. They both agree that they need more encouragement from the state which should not hamper the projects which are essential for continued economic growth. In addition to increased investments, more than half of entrepreneurs expect that the economic growth will be slightly higher than last year. They plan to increase investments and exports, which should bring them higher revenues and profits.
RBA analysts were conservative in their estimates, so they expect that in 2016 the growth will be between one and two percent of GDP, with a small drop in unemployment. However, more than a third of businesses plan to open new jobs and hire more employees. What remains as a constant problem are government deficit and public debt, which raise the price of borrowing for companies and thus reduce the competitiveness of Croatian products in international markets. RBA analysts expect that the public debt will reach 345 billion kuna in 2018, and that the Finance Minister will have to fulfil his promise of much lower deficit than the expected four percent of GDP.
