ZAGREB, April 18, 2018 – This year, the Croatian economy is expected to grow at the same rate as last year, at 2.8%, after which it will slow down a bit, the International Monetary Fund (IMF) said in its spring World Economic Outlook on Tuesday.
The IMF thus confirmed its projection from a closing statement released last October after a regular IMF mission visit to Croatia. However, it revised down its growth projection for 2017, from 3.1% to 2.8%. In 2019, the growth of the Croatian economy is expected to decelerate to 2.6%.
Inflation in 2018 is forecast at 1.5%, which is 0.3 percentage points higher than the projection in the autumn forecast. The same inflation rate is projected for 2019 as well. The projection of inflation for 2017 was reaffirmed at 1.1%.
The projection of the unemployment rate for 2018 was lowered by 1.5 percentage points to 12.0%, and the rate is expected to drop to 11.2% in 2019.
According to revised data, the unemployment rate in Croatia in 2017 was 12.2%, which is considerably lower than the 13.9% projected in the autumn outlook.
The forecast of this year’s current account surplus expressed as a share of GDP was reaffirmed at 3.0%, while next year it should slide to 2.1% of GDP. According to revised data, last year the surplus was 3.7%, merely 0.1 percentage point lower than in the autumn report.
Economic activity in the Emerging and Developing Europe region, which includes Croatia, is projected to grow at a rate of 4.3% in 2018, before slowing down to 3.7% in 2019.
The highest growth rate for 2018 is expected in Romania (5.1%), which is considerably lower than 7% growth in 2017; next year, growth is projected at 3.5%. It is followed by Turkey with an expected growth rate of 4.4% for 2018 and 4.0% for 2019, which is also considerably lower than last year’s 7.0%.
Advanced economies are projected to grow at 2.5% in 2018 and decelerate to 2.0% in 2019. The US economy is expected to pick up to 2.9% this year before slowing down to 2.7% next year.
The eurozone economy is forecast to grow at 2.4% in 2018 and 2.0% in 2019. Similar trends are expected in Germany, the largest European economy, which is expected to maintain the growth rate of 2.5% this year before decelerating to 2.0% in 2019.
The IMF expects global growth to reach 3.9% this year, compared with 3.8% last year.
“Growth this broad based and strong has not been seen since the world’s initial sharp 2010 bounce back from the financial crisis of 2008-09. The synchronized expansion will help to dispel some remaining legacies of the crisis by speeding the exit from unconventional monetary policies in advanced economies, encouraging investment, and healing labor market scars,” the report said.
