Political Crisis Did Not Hurt Croatian Economy

Total Croatia News

However, delaying the reforms for too long would have a negative impact on the economy.

Although Croatia has a caretaker government and this year has been marked by the political crisis that has led to early parliamentary elections being called, for the first time in Croatian history, Croatian economy has recorded unexpectedly positive results, reports poslovniplus.com on August 9, 2016.

GDP has been increasing for six consecutive quarters – it rose 2.7 percent in the first quarter compared to last year. Exports jumped by 2.4 percent in the first four months of the year, and industrial production has been growing for 17 months in a row. Public debt fell significantly, and the budget deficit in the first six months of 2016 was only 0.7 percent. The year-end projection of the budget deficit now stands at 2.2 percent of GDP, although it was initially 2.9 percent. In 2015, the deficit was 3.2 percent.

It is also unusual that, despite the crisis and the prevailing opinion in the polls that the country is going in the wrong direction, citizens are actually pretty optimistic, at least according to the economic indicators. For instance, personal consumption has been growing continuously for the past 22 months.

“These good figures are party the consequence of previous expectations of a very good tourist season in the country”, which is again a result of geopolitical developments that direct tourists away from the crisis areas and towards safer countries such as Croatia”, said economic analyst Hrvoje Stojić. There have also been continuous investments in tourism, added Stojić.

Another factor influencing the numbers could be the low price of oil. “The state investments are decreasing, but we cannot say that the state has a negative impact. However, waiting for too long with the reforms would have a negative impact on the economy”, he stressed. In addition, said Stojić, relatively low price of oil also had a positive impact on Croatian economy, but it was not certain that such positive environment would continue.

Therefore, it is necessary for the new government to be formed quickly after the elections on 11 September, as well as to be stable enough so that it can implement necessary reforms in the economy and other segments of the society in order to make sure that the current positive economic indicators continue.


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