ZAGREB, April 14, 2020 – In 2020 Croatia’s economy will contract by nine percent, the most in the group of emerging European economies, shows the latest global economic forecast of the International Monetary Fund (IMF), published on Tuesday.
The coronavirus pandemic has been strongly impacting economic activity, shows the latest forecast, reflecting the consequences of quarantine and other stringent measures with which governments around the globe have been trying to fight the new, highly contagious virus.
According to the latest IMF forecast, Croatia’s GDP will drop by 9% this year. For the sake of comparison, last autumn, before the outbreak of the epidemic, the IMF forecast a growth rate of 2.7% for Croatia’s economy in 2020.
In 2021 recovery is expected, with an estimated growth rate of 4.9%.
The international lender has also revised the growth rate for 2019 to 2.9%, down by 0.1 percentage point.
The IMF expects a significant increase in unemployment this year, to 11.5%, as against the autumn forecast of an unemployment rate of 8%.
In 2019 unemployment was at 7.8%, whereby the October 2019 forecast has been revised down by 1.2%.
In 2021 unemployment is expected to drop again, to 8%.
The IMF also forecasts a deficit in the current account, expressed as a share in GDP of 4% in 2020, whereas in its autumn forecast it predicted a surplus of one percent.
A deficit in the current account of 1.5% is forecast also for 2021.
The forecast about consumer price growth in 2020 has been revised up by 0.1 percentage point, to 1.3%. In 2021 prices are expected to grow at an almost unchanged rate of 1.2%.
In 2019, according to the IMF’s estimates, prices grew by 0.8%, a downward revision of the autumn forecast by 0.2 percentage points.
According to the latest forecast, the surplus in 2019 was 2.9%, which is 1.2 percentage points higher than forecast in October 2019.
The latest IMF estimates show that this year Croatia’s economy is expected to drop the most in the group of emerging European economies, which also encompasses Russia, Turkey, Poland, Romania, Ukraine, Hungary, Belarus, Bulgaria and Serbia.
The IMF estimates that those economies will drop by 5.2% on average this year, as against a 2.5% growth, forecast in the autumn of 2019.
In 2021, strong recovery is expected, with an estimated growth rate of 4.2%.
Last year, the emerging economies grew by 2.1% on average, 0.3 pp more than forecast by the IMF in October 2019.
A more pronounced drop in economic activity is expected this year in Ukraine and Belarus, of 7.7% and 6% respectively. The two countries are followed by Russia, with an estimated drop of 5.5%, and Turkey and Romania, each with a decline of 5%.
Poland’s economy is expected to contract by 4.6% and Bulgaria’s by 4% while economic activity in Hungary and Serbia is expected to contract the least, by 3.1% and 3% respectively.
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