Croatian Economy Expected to Grow by 3% in 2019

By 16 December 2019

ZAGREB, December 16, 2019 - Croatia's economy is expected to grow by 3% in 2019 and slow down to 2.8% in 2020, while favourable labour market trends are expected to continue, the Croatian National Bank (HNB) said on Monday.

Inflation is projected at 0.8% in 2019, due to a reduction of VAT on certain products and a fall in oil prices, while in 2020 it is expected to pick up to 1.4% as a result of increased food prices and higher excise taxes.

The HNB forecasts a higher current account and capital account surplus than last year, thanks to increased exports, stronger absorption of EU funds and a rise in revenues from remittances, while next year a lower surplus is expected.

Foreign debt indicators should continue to improve in 2020.

In such a macroeconomic environment the HNB intends to continue an expansionary monetary policy, supporting the high liquidity of the monetary system, while at the same time keeping the nominal kuna-euro exchange rate stable.

After running a surplus in 2018, the general government budget is expected to show a deficit of 0.1% of GDP in 2019 and a surplus of 0.2% in 2020. General government debt is likely to continue to shrink in accordance with fiscal rules, the HNB said.

More economic news can be found in the Business section.