A significant increase in growth forecast for Croatia’s economy.
The European Commission increased its assessment of the Croatian economic growth for this year to 1.1 percent, while in May it expected the growth of just 0.3 percent. However, it has called for the implementation of structural reforms to stem the further growth of public debt, reports Slobodna Dalmacija on November 7, 2015.
The European Commission announced its autumn economic forecast for 2015, 2016 and 2017, including data on GDP, inflation, employment, budget deficit and public debt in the member states, candidate countries and major trade partners of the European Union. After this year’s growth of 1.1 percent, Croatia’s GDP should next year grow by 1.4 percent, and in 2017 by 1.7 percent.
“Current forecasts show that the Croatian economy should be growing again after six years of recession. Economic forecasts predict growth of 1.1 percent of GDP this year, with the acceleration to 1.7 percent in 2017, due to higher external demand of major Croatian trade partners and higher domestic demand. In an environment of slowing global economy, it is extremely important to strengthen the foundations of the economy through structural reforms and reduce the very high public debt that, without decisive action, could reach almost 93 percent of GDP in 2017”, Commission Vice-President Valdis Dombrovskis said.
The long crisis has had a major effect on the Croatian economy – in the second quarter of 2015, Croatia’s GDP was approximately 12 percent lower than in the same quarter of 2008. “Good tourist season should make a positive contribution to GDP growth in the third quarter, but uncertainty before elections will likely slow activities towards the end of the year”, the Commission added and pointed out that the recent decision to convert the loans from the Swiss franc into the euro will likely have a small positive impact on consumption, since households are still facing pressure to reduce debt.
The slowdown of economic activities in emerging markets should have only a limited and indirect impact on the Croatian economy. The Commission foresees a slight decline in the unemployment rate in Croatia, from last year’s 17.3 percent to 16.2 percent this year, 15.6 percent next year and to 14.7 percent in 2017.
The budget deficit should fall from last year’s 5.6 percent of GDP to 4.9 percent this year, to 4.7 percent in 2016 and to 4.1 percent in 2017. According to estimates by the European Commission, the public debt should by the end of this year rise to 89.2 percent of GDP, next year it could reach 91.7 percent of GDP and 92.9 percent of GDP in 2017.