ZAGREB, December 21, 2019 – Erste Bank estimates that Croatia’s GDP growth in 2020 will slow down to 2.5% compared to the 3% forecast for this year, it was said on Friday during a Christmas function for the bank’s executives and the media.
Chief analyst at Erste Bank Alen Kovač said that personal consumption and investments were the main generators of growth in 2019 and that investments were supported by better absorption of European Union funds. Kovac expects that these two segments will once again be the main contributors to growth in 2020 and that a relatively strong growth in investments, once again supported by EU funds, would compensate for the potentially unfavourable economic situation abroad next year, which could mean negative risks for Croatian exports.
Those risks are primarily related to Brexit, the potential further deterioration of trade relations between the major powers, and the level of growth in Germany and Italy. Personal consumption and its contribution should remain relatively stable and strong, and that should be supported by positive aspects in the area of disposable income, consumer confidence, the labour market and increased wages in the public sector, Kovač said.
Risks related to the estimated growth rate of 2.5% in 2020 are relatively balanced and investments represent a positive risk, while the global surroundings are a negative risk,” Kovač underlined.
He added that growth climaxed in central and eastern Europe in 2018 while it slowed down in the majority of countries in 2019. Croatia is among that group of countries where a mild acceleration occurred, which is a positive exception.
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