ZAGREB, November 6, 2019 – President Kolinda Grabar-Kitarović on Wednesday said that Croatia needs an economic growth of at least 5 percent so that citizens can feel an improvement in the standard of living.
During a conference on Croatia’s economic policy in 2020, organised by the Croatian Association of Economists, at which she talked about key challenges and preconditions for economic development, President Grabar-Kitarović asserted that there are more and more positive elements because the economy is growing, as are wages and employment, and Croatia is climbing up the ladder of competitiveness, along with positive trends in public and foreign debt trends.
According to her estimate, Croatia needs a growth of five percent for citizens to be able to feel that in their living standards.
“We need an economic growth of at least five percent a year and only then will we feel any real improvement in standards. We are growing now but we continue to be oversensitive to external instabilities, and that growth will slow down to two percent as we still have not set the foundations for stronger growth. Some parts of the country still are lagging behind drastically and even though we are growing, comparable countries are growing faster,” she said.
She said that all that negatively reflected on demographic changes and that it is necessary to establish conditions that will permanently improve living standards, rationalise and digitise state administration, and that public administration has to be a support and not a barrier to an innovative economy.
The conditions for an accelerated growth are zero tolerance of corruption, a comprehensive reform of state administration and the judiciary, and facilitating the implementation of innovations.
“We have to increase the level of employment, modernise working conditions, decrease emigration and the shortage of a qualified labour force,” she added.
She believes that it is necessary to do away with the notions of a minimum wage and child allowances, and that it is necessary to reshape the economy so social welfare does not rule.
“Our people do not want welfare benefits but a well-paid and dignified job,” she underlined.
Croatia needs to become a place for new investments and in that regard tax reliefs are welcome, she said. Investors need to be provided with legal security for their investment because the uncertainty of regulations and long-standing court procedures have become too heavy a burden on development, she added.
According to Grabar-Kitarović, it is necessary to strongly enhance the pension and healthcare systems and to advocate more strongly for citizens with below average earnings and for pensioners.
She underlined the importance of economic diplomacy to support exports and attract investments.
We are stagnating without any solutions for new jobs, says economic analyst
The president of the Croatian Association of Economists, Ljubo Jurčić said that Croatia was achieving political success in Europe, but that the final results are how people live in Croatia. Croatia is stagnating in Europe, he underscored, and we do not have a solution as to how to create jobs and find additional workers.
There is no industrial policy. There is no analysis of the exchange rate policy or of the second pension pillar and that is holding us back, Jurčić concluded.
Minister of Environment and Energy Tomislav Ćorić said that with regard to the reduced public debt to GDP ratio, Croatia is one of the most successful economies in Europe.
“Our credit rating has once again been raised to investment level, Croatia is in the company of the best, profit tax has been reduced, the non-taxable income has been increased, VAT has been reduced on products and services and so on,” he said.
Ćorić claimed that there were 1.5 million employed in July, which was the most in the past 28 years, and that the average wage had increased by 5% over the past 3 years. The minimum wage too has increased, as has the wage base for public servants, and pension allowances also have gone up.
“Croatia today is miles ahead of the Croatia of 2015 and the figures can be checked,” he said.
The numbers give us a basis for optimism and we need that in 2020, he said and added that he believes economic growth in 2020 will be better than this year.
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