Lack of Reforms Slowing Down Economic Growth

By 3 May 2018

ZAGREB, May 3, 2018 - Director-General of the Croatian Employers' Association (HUP) Davor Majetić said on Thursday that the European Commission's forecast of a growth of 2.8% of Croatia's economy was realistic and added that growth was slowing down as the reforms the government planned were not being implemented.

The EC on Thursday confirmed its forecast of three months ago and estimates that the Croatian economy will grow at a rate of 2.8% this year and 2.7% next year.

"The Commission's forecast is realistic and it expects a somewhat slower growth rate which has resulted because all those reforms we expect and the government planned are not occurring," Majetić told Hina. "The loss of time (to implement reforms) is reflected in the lack of any steady growth which we expect or wanted to see," Majetić added.

The Croatian Chamber of Commerce (HGK) underscored that the EC's forecast is in line with the Chamber's estimates of a mild edging down in economic growth. A somewhat higher growth rate was achieved in the preceding period mostly due to a significant increase in the value of the export of commodities after joining the European Union and favourable global circumstances, however, that impact on GDP growth is decreasing.

On the other hand, domestic demand is recovering albeit not at a satisfactory pace, and last year it was 11% lower again compared to the period before the crisis. "In order to achieve greater growth rates, measures are required that will impact the dynamics of growth in individual categories of domestic demand, primarily personal consumption and investments," HGK believes.

HGK further noted that global trends, particularly a slowing down in growth in the EU, as Croatia's largest market for commodities and services, will also impact Croatia's GDP growth.