According to forecasts, GDP growth has slowed down even before the Agrokor crisis hit the Croatian economy.
The Zagreb Economics Institute estimates that the beginning of this year brought a stagnation of GDP growth, and there are fears that the fall of Agrokor will shake up the rest of the economy, reports Večernji List on April 12, 2017.
Stagnation has been observed by the Economics Institute through its monthly forecasting CEIZ index which in January and February slowed down cumulatively by 1.3 percentage points compared to the last quarter of 2016. The slowdown was more pronounced in February, by 1.1 points, which was the largest annual decrease in the value of the index recorded since April 2012.
Maruška Vizek, director of the Institute, says that this is not the first time that there are monthly fluctuations, which at least in January and February did not have a significant connection with Agrokor. “It is possible that in the last quarter of 2016 we reached our limit. Half of the components of the CEIZ index rose year-on-year, especially the number of tourist arrivals, which in February 2017 were ten percent higher on annual basis, but revenues from value added tax recorded a significant decrease and thus gave the largest negative contribution to the change in value of the CEIZ index in February,” says Vizek.
Analyst Velimir Šonje points out that the most important statistical information published recently was the growth of exports at a rate of 19.1 percent compared to the first two months of 2016. This increased the export-import ratio from 60 to 67 percent. Šonje hopes that the crisis in Agrokor will encourage suppliers to further redirect their focus to larger, international markets, which would be “a very healthy process.”
“Agrokor is not as big as was being reported in the last few days, but it is large enough that it can have impact on GDP. What will that impact be will depend on the amount of cash that banks will pump in, as well as on the amount of debt that will be paid to suppliers,” says Vizek. The fall of Agrokor has brought to the surface a number of other weaknesses that are present in the Croatian food industry, which is strongly tied to Konzum and has not worked enough on conquering other markets.
“Agrokor has so far shook the market, but it has not collapsed it. That can only mean three things: first, that Agrokor is not as large and ‘systemic’ as is being depicted; secondly, that market participants are short-sighted and did not see the storm; or, thirdly, that stakeholders assess that there must be a calming down effect due to the government’s intervention. The time will tell,” says Šonje.
Based on the movement of the CEIZ index, the Zagreb Economic Institute expects that the real growth rate of GDP in the first quarter of 2017 compared to the same period last year could amount to 2.4 percent. In the fourth quarter of 2016, the growth rate was 3.4 percent.
